CBI warns South West will be hardest hit of all UK regions under no deal Brexit

September 3, 2019

The South West will suffer more than any other region if the UK crashes out of the EU with no deal, the CBI claims.

The national business organisation has written to all the region’s MPs urging them to find a Brexit deal that works for the South West and warning that a no deal exit would hit the regional economy by £13bn over the next 15 years. 

In the letter, CBI director-general Dame Carolyn Fairbairn, pictured, says preparing for no deal was sensible, but it was vital that politicians dedicated as much effort to striking a deal as preparing for failure.

“There is no such thing as a no deal outcome without negative consequences for jobs and growth,” she says.

“Relative to the rest of the UK, the South West would fare worse in a no deal scenario. Real GVA (gross valued added) in the South West – a measure of the value of goods and services produced in the region – could be £13bn lower by 2034, compared to if the EU-UK relationship remained the same.

“This is more than the value of annual public spending on doctors, hospitals and other health services in the region.”

Businesses across the region are already spending vast amounts of money on emergency plans should a no deal Brexit hit their supply chains and increase tariffs and other costs, she said.

However, while large companies could afford to take such a financial hit, smaller businesses “do not have the spare cash to try and mitigate the effects with so much Brexit uncertainty”, she writes. 

The CBI’s own assessment of the state of no deal preparations by the UK, the EU and businesses in 27 key areas of the economy concludes that – despite existing mitigating actions – disruption is likely in 24 of them “immediately following a no deal outcome”. In all 27, negative impact is anticipated in either the short or long term.

Dame Carolyn recently chaired a round table made up of a cross section of South West businesses in Bristol to talk about   the impact of Brexit.

In her letter to MPs, she writes: “Firms across the South West have built new warehouses, stockpiled goods, hedged against currency fluctuation, trained staff in new customs procedures, and some have planned factory shutdowns at great expense.

“But some practicalities cannot be avoided, and prepared is not the same as protected. Tariffs and additional customs costs, as well as rising import costs caused by currency depreciation, will hit British competitiveness in the long term.

“And in the short term, perishables and medicines cannot withstand extended unplanned delays at borders.

“Smaller firms do not have the resources to evaluate what a no deal will mean for their business, and the majority have taken no action to mitigate the consequences.

“Some practicalities cannot be avoided. Warehouses are full at Christmas time, the only preparation many services firms can do is to move jobs to the EU, and that trade relies as much on EU mitigations as UK ones.”

She said British firms were full of ideas for lifting investment and providing the foundations for a growing and fair economy.

Securing a good deal with the EU was a vital starting point for this ambitious agenda.

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