Brexit will exacerbate UK regional inequality

Outlook

The UK fiscal contribution to the EU will end after Brexit but non-tariff barriers will rise, EU integration will end and if there is no deal there will be bilateral tariffs and more non-tariff barriers.

Supply chains are complex in knowledge-intensive industry and services sectors and will struggle to replace foreign supply. London, the South East and other urban areas will suffer as more workers are employed in high-tech sectors including business, financial services and high-tech industry.

Less knowledge-intensive sectors will more easily switch suppliers, reducing the impact, but in the longer term higher-skilled regions will adjust quicker, leaving less prosperous regions further behind.

Impacts

• Edinburgh is set to be the sixth hardest-hit city according to the Centre for Cities as 21% work in private knowledge-intensive services.
• The UK Trade Observatory splits the model by residents/workers; in Streatham 650 jobs may go, but 2,250 residents/commuters may lose jobs.
• Manchester, Leeds, Bristol and Birmingham areas see a similar trend and policy will need to bolster suburbs further out as well as cities.
• City of London may lose the most GDP but will recover fast as 7.3% work in high-tech (UK 4.9%) and 57% of 25-64-year-olds have a degree.