- Centre for Cities
LONDON – Wealthy Southern cities are predicted to be hardest hit by Brexit, according to a new report.
The study, by the Centre for Cities and the Centre for Economic performance at the London School of Economics, found that cities with large high-skilled service sectors, such as business and financial services, are expected to be worst hit by potential tariff changes.
More prosperous places in the North, the Midlands and Wales, which have low numbers of highly skilled workers and smaller knowledge-intensive private sectors, will be least directly impacted by any form of Brexit.
But, it says, this makes them less well equipped to respond to the economic shocks ahead.
A ‘hard’ Brexit is also likely to double the economic impact of leaving the EU: the average drop in economic output across all UK cities is estimated to be 2.3% in the event of a ‘hard’ Brexit, and 1.2% in the event of a ‘soft’ Brexit.
These estimates are based solely on expected increases in trade costs.
“All UK cities face significant economic challenges after we leave the EU, but the impact of both ‘hard’ or ‘soft’ Brexit will be felt very differently across the country,” said Andrew Carter, chief executive of Centre for Cities.
“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,” he said.
Carter said the government should ensure post-Brexit trading arrangements remain as close to the current agreements as possible, and that cities receive enough investment to help them weather the combined challenges of Brexit, globalisation and automation.
“This research shows that focusing on the likely local economic impacts of Brexit will be a critical ingredient for policymakers when thinking about how to offset the negative economic effects that loss of trade due to Brexit will bring,” said Stephen Machin, from the Centre for Economic Performance.
Keep scrolling for a list of the six cities predicted to be most affected by a ‘hard’ Brexit.
6. Edinburgh: -2.7% (reduction in economic output)
- Shutterstock/Shahid Khan
Population (2011 census): 495,360
Reading, London and Edinburgh have the largest high-skilled service sectors in the UK. A decrease in economic activity in knowledge-intensive sectors, which include business and finance, may have knock on effects for other sectors, given their “multiplier effect” in local economies.
Business and financial services will be among those worst hit industries by Brexit.
In joint seventh place, with a predicted drop in economic output of 2.6%, come London, Aldershot, Leeds and Ipswitch.
5. Slough: -2.8% (reduction in economic output)
- Matt Buck, Flickr
Population (2011 census): 140,200
Unemployment in Slough is low and the Centre for Cities released research earlier this year showing the city is second only to London in terms of productivity.
But the town’s economic success has been built with the help of a large population of migrant workers. Meanwhile, the town’s white British population has decreased substantially since 2000.
4. Swindon: -2.8% (reduction in economic output)
- Ben Sutherland / Flickr
Population (2011 census): 209,156
Swindon has a high population of migrant workers in low-paid and low-skilled jobs. Meanwhile, the local Conservative council has implemented £20 million-worth of cuts.
Car manufacturers Honda and BMW, tech company Intel and bank Nationwide are major employers in the town. But these international companies will need to secure favourable trading agreements to continue to employ so many in Swindon.
3. Reading: -2.8% (reduction in economic output)
Population (2011 census): 318,014
Like Edinburgh, Reading has one of the largest high-skilled service sectors in the UK, which is likely to suffer from Brexit.
In February, local newspaper getreading reported that almost 20% of Reading residents who had voted to leave the EU would now vote to remain.
2. Worthing: -2.8% (reduction in economic output)
- Wiki Commons
Population (2011 census): 104,600
Earlier this year, the Centre for Cities reported that Worthing’s economy was among the best performing in the UK, with a high employment rate and high productivity.
But it also noted that Worthing was the second highest city in the UK for exports per job in the country, making it particularly vulnerable to Brexit and tariff changes.
Worthing is also predicted to be the UK’s second worst hit city in the event of a ‘soft’ Brexit.
1. Aberdeen: -3.7% (reduction in economic output)
- Paula Fisher/Shutterstock
Population (2011 census): 222,793
Aberdeen is predicted to be worst hit by either a ‘soft’ or a ‘hard’ Brexit, although the report says the city is an outlier: the city’s economy is heavily reliant on the oil industry, and Brexit’s impact will be driven by how it effect this one sector.