The Regional Impact of Brexit – Assessing the Government’s ‘EU Exit Analysis’

The part leaking to the press of the Government’s EU Exit Analysis – Cross Whitehall Briefing[i] highlighted the dire consequences for many parts of the UK of leaving the EU in the June 2016 referendum. The leak and its handling also exposed the extreme reluctance of the Government to provide the information necessary for informed public debate. The Government asked the civil service to investigate three scenarios: Remain in the single market; A free trade deal with the EU; No deal.  The public have been denied the opportunity of properly assessing for themselves these three outcomes, since no details have become available about the assumptions, methodology or data used in arriving at the impacts on GDP summarised in Table 1 (below).

In the light of the above we would draw attention to the study of the regional and sectoral impact of Brexit, commissioned by the Federal Trust and undertaken by Dr Andrew Black (Senior Fellow at the Global Policy Institute). This study considers four scenarios which cover tariff impacts, the impacts of lower investment and consumption for each sector, and their related multiplier effects. The assumptions behind the results are made clear as are the data sources and the input-output methodology.

The lack of details for the Government study makes comparison difficult. However, Dr Black’s study shows some marked divergences from what we know of the government study. His study shows:

  • rather less variation between regions under all scenarios, so even the South-East is hit hard
  • rather worse outcomes for 7 of the 12 regions, while Wales, the East of England and the North East do better in the government study
  • far worse outcomes across the board in the worst case scenario; also different rankings (Table 2).

Hard Brexit and the Regions by Dr Black was published in November 2017 and is available HERE or HERE.

See also:

Andrew Black, Hard Brexit, international trade and the WTO scenario, May 2017, The Federal Trust


Table 1 Government study: Variation in growth rates compared to an unstated baseline model in % of the baseline figure)

Region Single Market Free Trade No deal No dealrank
East Midlands -1.8 -5.0 -8.5 6
Eastern -1.8 -5.0 -8.0 5
London -1.0 -2.0 -3.5 1
North East -3.0 -11.0 -16.0 12
North West -2.5 -8.0 -12.0 =10
South East -1.5 -4.5 -7.5 4
South West -1.0 -2.0 -5.0 2
West Midlands -2.5 -8.0 -13.0 =10
Yorkshire and Humberside -1.5 -5.0 -7.0 3
Northern Ireland -2.5 -8.0 -12.0 12
Scotland -2.5 -6.0 -9.0 7
Wales -1.5 -5.5 -9.5 8

1 = least impact

Source: Guardian 8 February 2018


Table 2 Dr Black’s worst case scenario

Percentage change in gross output

Region % Rank
East Midlands -15.30 11
Eastern -13.78 6
London -10.51 1
North East -13.27 2
North West -14.73 10
South East -13.35 3
South West -13.45 4
West Midlands -14.64 9
Yorkshire and Humberside -14.56 8
Northern Ireland -15.59 12
Scotland -13.73 5
Wales -13.94 7

1 = least impact

[i] Jessica Elgot, Heather Stewart and Peter Walker ‘Revealed: the £80bn. cost of hard Brexit’, The Guardian, 8 February 2018.

About the GPI

The Global Policy Institute is a research institute on international affairs. It is based in the City of London, and draws on both a rich pool of international thinkers, academics as well as policy and business professionals. The Institute gives non-partisan guidance to policymakers and decision takers in business, government, and NGOs.