Government & Nonprofit

Brexit and the wider UK economy

Description
Brexit and the wider UK economy
Published
of 5
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Related Documents
Share
Transcript
   1 Brexit and the wider UK economy Jane Pollard Centre for Urban and Regional Development studies, School of Geography Politics and Sociology, Newcastle University, NE1 7RU, UK  jane.pollard@newcastle.ac.uk.  Forthcoming in Geoforum https://doi.org/10.1016/j.geoforum.2018.02.005  Please note:  Changes made as a result of publishing processes such as copy-editing, formatting and page numbers may not be reflected in this version. For the definitive version of this publication, please refer to the published source. You are advised to consult the publisher’s version if you wish to cite this paper.     2 Brexit and the wider UK economy Brexit raises profound - as yet unanswerable questions - about future economic development in  what is a multistate nation, the United Kingdom. What next for relations with EU neighbours for England, Wales, Scotland and perhaps most crucially Northern Ireland?  At the time of writing, the shape and nature of Brexit remains unclear, so in what follows I will move in, necessarily, broad strokes across some empirical and then conceptual terrain.  With few exceptions (see Economists for Brexit, no date) economic analyses of the effects of Brexit are united in their projections of negative consequences for the wider UK economy (HM  Treasury 2016, Dhingra et al.  2016, Los et al.  2017, van Reenen 2016); the pessimism reflects the dominance of the EU economies in the UK’s patterns of trade and investment. Dhingra et al.  (2016) predict annual household costs of £850 - £1700 per annum, dependent on a ‘soft’ or ‘hard’ Brexit. The likely regional repercussions are harder to specify, reflecting different modelling assumptions and data. Dhingra et al. (2017), focusing on Local Authorities, argue that most of the hardest hit areas will be in London and the South East, courtesy of their specialisation in financial sectors assumed to be particularly hard hit by either a ‘soft’ or ‘hard’ Brexit. By contrast, Los et al.  (2017) argue that any disruption to the UK’s trade with the EU will leave its economically weaker regions  –   ironically those that voted ‘ Leave ’  - the worst affected; while London conducts a greater  volume of trade with the EU than any other UK region, as a diverse global city it is relatively less dependent on EU trade for its economic wellbeing. This argument dovetails with other analyses of Brexit that focus on EU Cohesion Policy; EU regional development monies are, by definition, targeted to the UK  ’s  weakest economic regions, Cornwall and the Isles of Scilly in England and  West Wales (Worley 2016, Mason 2017). However, there is more at stake here than just the sums of money involved. As Begg and Bachtler (2016: 9) put it, Cohesion Policy has provided, “a thread of continuity. Indeed, it can be argued that Cohesion Policy provides the only coherent approach to regional development in the UK, based at least partly on some justification of regional need, a strategic response and the obligation for central government to consult with subnational actors ” .  To further complicate matters, Begg and Bachtler (2016) invite us to consider two of the likely indirect   effects of Brexit that could generate significant regional repercussions. These relate, first, to GDP changes’ effects on tax revenues and consequently public finances and, second, to the consultancy and construction contracts - generated in regions that are beneficiaries of Cohesion Policy  –   that are typically returned to the net contributors to the EU budget, in essence a form of induced exports. If we focus instead on the likely medium to longer-term effects of Brexit, three pillars of UK political economy are worth restating. First, a defining characteristic of the UK economy since the 1970s is its decline relative to other northern and western European countries and the USA.  As Phil McCann (2016: 33) has illustrated, in forensic detail, “the UK economy is now relatively  weaker than it was in 1970, 1990 or 2000”. What growth there was relative to the UK’s main comparators in the new millennium was wiped out after 2008, leaving the UK with total GDP per capita 3.7% below the average for the 34 OECD countries (McCann 2016). A second, enduring characteristic of the UK economy is its profound geographic unevenness in growth, prosperity and wellbeing that has endured since the middle of the 19 th  century (Gardiner et al.  2013, Martin 2015). This unevenness endures - to an extent that is unusual compared with other EU and OECD countries  –   and has been intensifying since the 1980s (Martin et al.  2015, McCann 2016). Third, and not unrelated, the UK has one of the most centralised governance systems in the industrialised  world (Pike et al  . 2010, McCann 2016).  What does this decline, unevenness and centralisation mean for what follows? For starters, the UK’s membership of the EU  was not the cause of these difficult political economic realities and Brexit will not be a solution. T he UK’s urban and regional inequalities reflect a political,   3 sectoral and spatial imbalance that has privileged London and the South East without fostering the linkages in people, trade, technology or investment that drive or transfer economic growth elsewhere in the UK (McCann 2016, Hall and Wójcik this issue). A potentially more positive reading of the Brexit vote, however, is that it may yet help to produce the conditions in which it is possible to challenge this prevailing model of economic growth. On this score, economic geographers have plenty to contribute empirically and conceptually and Hall and Wójcik (2017), Lai and Pan (2017) and Dorry and Dymski (2017) all sketch part of this agenda from their different geographic vantage points. Writing from the UK experience, however, three brief examples follow. First, Ron Martin and colleagues have made a compelling case for a ‘ sectoral and spatial rebalancing  ’  of the UK economy (Martin et al.  2015). One plank of this should explore what Bluestone and Harrison (2001) called the ‘high road’ to development: seeking to rejuvenate manufacturing regions (Christopherson et al.  2014), using Brexit to explore new freedoms for public ownership and state aid (Elliott 2017), and protecting labour laws and regulation rather than retreating to a ‘low road’ model of the UK as a low tax, low  wage dumping ground (Oltermann 2017).    A second example concerns the remit of financial geography.  As a sub-field once concerned about its marginal location in Economic Geography (Lee et al.  2009), financial geography has certainly ‘arrived’  with neoliberalisation, financialisation and financial crisis. Yet for all the fascinating work about financial centres and new financial instruments, it is surely time to re-engage with some more normative political economic questions about the relationship between finance and its role (or not) in supporting economic development.  What would we like banks and other financial intermediaries to ‘be’ , to ‘do’   and ‘where’ ?  The UK houses one of the most centralised and concentrated banking sectors in the OECD (CMA 2014), its capital markets are geographically concentrated and there remain problems in providing debt and equity to support small firms (Fraser et al  . 2015). If we conceived financial intermediaries to support initiatives for more balanced economic development, for example supporting SMEs engaged in advanced manufacturing, how fit for purpose is the UK financial landscape?  What kinds of institutional and spatial restructuring of finance would be required to support development beyond London and the South East? And what possibilities are there for institutional innovation in, say FinTech (Lai and Pan 2017) and /or spatial decentralisation given the prevailing dominance of London? Third, and signalling the critical importance of finance in wider economic, political, cultural and social debate, any such visions and questions speak to intensifying pressures for decentralising and devolving economic, political and fiscal governance and accountability in the UK (see Martin et al.  2015). Brexit is but one of a series of events that challenges academics and policy makers to produce and nurture more inclusive imaginations that are less centred  –   financially, politically and discursively  –   on the experiences of London and the South East. References Begg I and Bachtler J (2016)   Cohesion and cohesion policies in the UK: what might Brexit entail? Available at: Iain-Begg-and-John-Bachtler-Workshop-Policy-Brief.pdf  Bluestone B and Harrison B (2001) Growing prosperity: the battle for growth with equity in the 21 st   century  , Berkeley: University of California Press. Christopherson S, Martin R, Sunley P and Tyler P (2014) Reindustrialising regions: rebuilding the manufacturing economy?   Cambridge Journal of Regions, Economy and Society  , 7,   351  –  358 Competition and Markets Authority (2014) Consultation: personal current accounts and banking services to small and medium sized enterprises  . London: CMA.   4 Dhingra A, Machin S and Overman H (2017) The local economic effects of Brexit  , Centre for Economic Performance, London: LSE Dhingra S, Ottaviano G, Sampson T and Van Reenen J (2016) The consequences of Brexit for UK trade and living standards  , Centre for Economic Performance Brexit Paper No. 2, LSE: London   Economists for Brexit (no date) The economy after Brexit  , https://static1.squarespace.com/static/58a0b77fe58c624794f29287/t/58a4ae6aebbd1a42255ba534/1487187590771/Economists_for_Brexit_The_Economy_after_Brexit.pdf   Elliott L (2017) Why the moaning? If anything can halt capitalism’s fat cats, it’s Brexit, The Guardian   https://www.theguardian.com/commentisfree/2017/jul/21/capitalism-fat-cats-brexit-leaving-eu?CMP=Share_iOSApp_Other Fraser S, Bhaumik S and Wright M (2015) What do we know about entrepreneurial finance and its relationship with growth? International Small Business Journal   33,1, 77-88 Gardiner B, Martin RL, Sunley PJ, Tyler P (2013) Spatially unbalanced growth in the British economy,  Journal of Economic Geography  , 13, 6, 889-928   HM Treasury (2016) HM Treasury analysis: the long-term economic impact of EU membership and the alternatives  , https://www.gov.uk/government/publications/hm-treasury-analysis-the-long-term-economic-impact-of-eu-membership-and-the-alternatives Lee R, Clark, G, Pollard J and Leyshon A (2009) The remit of financial geography - before and after the crisis,  Journal of Economic Geography  , 9,5, 723-747 Los B, McCann P, Springford J and Thissen M (2017) The mismatch between local voting and the local economic consequences of Brexit, Regional Studies 51, 5, 786-799 Martin RL (2015) Rebalancing the Spatial Economy: The Challenge for Regional Theory, Territory, Politics, Governance  , 3, 3, 235-272   Martin RL, Pike A, Tyler and Gardiner (2015) Spatially rebalancing the UK economy: the need for a new  policy model  , Regional Studies Association Mason R (2017) Councils ask Treasury to replace lost EU regeneration funds post-Brexit   The Guardian   https://www.theguardian.com/politics/2017/jul/28/treasury-eu-regeneration-funds-brexit-uk-eu McCann, P (2016) The UK regional-national economic problem: Geography, globalisation and governance  , London: Routledge. Oltermann P (2017) Hammond threatens EU with aggressive tax changes after Brexit, The Guardian https://www.theguardian.com/politics/2017/jan/15/philip-hammond-suggests-uk-outside-single-market-could-become-tax-haven Pike A, Rodriguez-Pose A and Tomaney J (Eds)(2010) Handbook of Local and Regional Development  ,  Abingdon; Routledge   5  Van Reenen J (2016) Brexit’s Long  -Run Effects on the U.K. Economy, Massachusetts Institute of Technology https://www.brookings.edu/wp-content/uploads/2017/02/brexits-long-run-effects-john-van-reenen.pdf  Worley W (2016) Cornwall issues plea to keep EU funding after voting for Brexit, The Independent  , http://www.independent.co.uk/news/uk/home-news/brexit-cornwall-issues-plea-for-funding-protection-after-county-overwhelmingly-votes-in-favour-of-a7101311.html
Search
Related Search
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks