With a potential ‘hard-Brexit’ on the horizon, Aberdeen is predicted to be the UK’s worst-hit city according to a report published by the Centre for Cities and the Centre for Economic Performance (CEP) at the London School of Economics.
London and Edinburgh also featured in the top ten in the report that analysed potential outcomes from both a ‘hard’ and ‘soft’ Brexit in the ten years following the UK’s split from the EU.
With a hard Brexit, the economic output in UK cities drops by 2.3%, this brings into account the World Trade Organisation’s default rules, which are to be applied if no deal is made with the EU.
In a soft Brexit scenario in which the UK enjoys free trade with the EU – a situation which at present, is looking ever more unlikely – economic output is predicted to fall by 1.2%.
Under both scenarios, Aberdeen leads the way with a 3.7% loss of output under a hard Brexit, and a reduction of 2.1% under a soft Brexit.
In a hard Brexit situation, Edinburgh would be the sixth worst affected city, with economic output down 2.7%, with London facing a 2.6% reduction.
With energy, business and financial services being the worst affected sectors, of which these cities specialise in, they would be the most badly hit when the expected increase in tariffs are brought in by Brexit.
However, there is good news for certain areas of the UK such as the North of England, the Midlands and Wales, as these areas are said to be the least affected.
Chiefly characterised by lower numbers of high-skilled workers and a low number of private sector knowledge-intensive sectors, post-Brexit vulnerability is reduced. Yet the report states that these cities may still be less-equipped to deal with any economic changes that they may encounter.
Yet the report states that these cities may still be less-equipped to deal with any economic changes that they may encounter.
What the Experts Say
Centre for Cities Chief Executive, Andrew Carter writes: “Contrary to much of the received wisdom on Brexit, it is the most prosperous UK cities which will be hit hardest by the downturn ahead but poorer places across the north and Midlands will find it tougher to adapt.
“First and foremost, the government should do all it can to minimise the coming economic shocks by securing the best possible trade deal with the EU.
“That means ensuring that our post-Brexit trading arrangements are as close to our current relationship with Europe as possible.”
Carter adds: “But it is also critical that the government uses its forthcoming industrial strategy to give cities across the country the investment, powers and responsibilities they need to make their economies as successful and competitive as possible.”
Leader of the Scottish Liberal Democrats, Willie Rennie states: “This report shows that a Brexit, whether soft, hard or even multi-coloured will have a significant negative impact on major cities across Scotland.”
The report comes as Welsh and Scottish ministers voted to block the UK’s Brexit repeal bill. Stating that they cannot agree to the European Union (Withdrawal) Bill in its current form.
The intention of the Bill is to ensure that current EU laws apply in Britain on the day of Brexit, bringing a seamless transition. This will bring some current EU responsibilities into the hands of Westminster.
However, Scottish and Welsh governments believe this brings about a ‘power grab’ and that any legislation must be amended to protect devolution and to protect citizens and businesses.