Institute of Economic Development Executive Director Nigel Wilcock and Director Paul Frainer discuss economic life in the UK after leaving the European Union
In this interview, Institute of Economic Development Executive Director Nigel Wilcock (NW) and Director Paul Frainer (PF) discuss the economic life of the UK after leaving the European Union, including the immediate next steps for economic development professionals to consider and which sectors could be the hardest hit. They also offer their thoughts on how else businesses can be supported and emerging opportunities, as seen by the Institute of Economic Development.
As the UK embarks on a new economic phase, how optimistic are you about the future?
NW: “In our pre-Christmas webinar, Brexit: how are economic development professionals preparing for life post-31st December?, we asked delegates in a poll how optimistic they are about the medium term. Most said they were not at all optimistic or not very optimistic, with the two of those combined hitting 62%, and nobody was very optimistic about the longer term. On the flip side, at the beginning of COVID-19, I found myself trapped in some headlights and hysteria that this was going to be economically appalling. Whilst it has been a personal disaster for many, the economy has sort of limped on and some sectors have barely noticed it at all. So perhaps we cry catastrophe too often.”
Where are the immediate next steps for economic development professionals to consider?
PF: “Many issues we will need to grapple with in relation to Brexit will be from a local or ‘bottom-up’, level – and, as a starting point economically, you simply cannot decouple the short to medium term effects of COVID-19 from what could be a final nail in the coffin for some businesses, and even sub-sectors now we have left the EU. This will only manifest overtly as we progress through 2021 and beyond, but, of course, many sectors and industries were not in an economically healthy position even prior to this and both Brexit and COVID-19 combined could well be catastrophic. Having said that, there will most certainly be new niche markets and sectors which arise through this, and we must be doing everything we can at a hyperlocal and granular level to allow and facilitate these to flourish.”
Which sectors do you think will be hardest hit?
NW: “There will be some disinvestment as capacity shifts around to different European plants so, in five years’ time, we will have seen some clear damage to both the manufacturing sector and the agricultural sector in particular. All of that means some consequential damage to UK regional economies that can least afford it. And yet there is every chance that those diverse, knowledge-driven, service-based, fast-growth economies may be barely noticing a difference. It makes you wonder if there is going to be a real twin-track to the economy from now on. The fact that a deal was achieved will hopefully remove the worst of these threats, but it is clear that we will start seeing some localised damage.”
How else can businesses be supported?
PF: “Macro businesses often have greater resilience, and they will have the ability to make more long-term choices, but on a more granular level, we will certainly see huge pressures and are now working incredibly hard to identify businesses and industries that are falling between the cracks and not able to survive on government grants and loans. The self-employed labour market is another that needs significant focus, especially in areas crucial to recovery such as the cultural sector, and without these industries, you lose the vibrancy within any economy. We need to keep a close eye on trends such as remote working and digital infrastructure connectivity and what these may mean for local economies, labour markets in big cities and town centres, and investment in those areas.”
Are we clear about pot-Brexit funding?
NW: “Not fully. I think the long wait around Brexit, and with the focus on COVID-19, has resulted in some economic complacency about what is coming down the track. This whole position and the government’s stated position on the levelling up agenda seems to be at odds to me – and this is not helped by the need for further clarity on funding. Whilst the Chancellor, in the Spending Review last November, announced that £220 million will be allocated in 2021-22 to help local areas prepare for the introduction of the UK Shared Prosperity Fund, we also know that further details of the UKSPF will be set out in a UK-wide investment framework which they have said is due to be published in the spring.”
What are the emerging opportunities, as you see them?
PF: “There are likely to be some massive opportunities. Through some of the accelerated trends we have seen during COVID-19, we have been given a virtual crystal ball to look 10 years into the future. This is an opportunity to shape how we want the economy to change, especially in respect of the environmental and social challenges we face. Green technologies, including energy have a crucial role to play, and from both a central and local government perspective the commitments around climate change are a powerful lever to shape markets that facilitate this positive change, not to mention the subsidiary industries. This could stimulate a more sustainable economy and drive innovation in this country.”
