Brexit and the Northern Powerhouse: Doom & Gloom or New Opportunities on the Horizon?

It’s not just the ‘Fog on the Tyne’ which appears to be casting a dark cloud over the North. On 23 June 2016, the United Kingdom (UK) voted in favour of leaving the European Union (EU) and the aftermath has left the future of the North of England in considerable uncertainty.

For some time many have considered the region to be the ‘poor relative’ to the South East of England, the financial heart of the services industry continuing to beat strongly. Those in the North may be forgiven for the pessimistic whispers whirling around the region. The North was once recognised as the industrial heartland of the UK but many now associate the region with the particular low-points in its history. Ship building sailed away from the area in the 70s, the mines closed in the 80s and 90s, in the 00s the global recession significantly damaged the economy of the area, and in the current decade the furnaces of the steel industry have been extinguished.

Prior to the referendum, the 2010 coalition Government coined the term the ‘Northern Powerhouse’. This was a proposal to boost the economic growth of the area by supporting the inter-connected development of the region’s ‘core cities’, Newcastle, Leeds, Sheffield, Manchester and Liverpool to move the UK economic reliance away from the South East. The vote for Brexit has since cast some doubt on the commitment to this plan to strengthen the North. However, there is an argument to suggest that such a pessimistic outlook may be misplaced.

One of the tenets of the Northern Powerhouse is to create transportation improvements between the core cities in order to increase productivity within the area. The North-East corridor has already established strong transportation links by land (A19 & A1), sea (Port of Tyne, Teesport and the Port of Hull), rail (East Coast main line) and air (Newcastle and Durham Tees-Valley Airport). These links have already been utilised by many international corporate investors such as Nissan, however further improvements may soon be on their way. In the 2016 Budget, the UK Government pledged £60 million worth of investment towards the development of ‘High Speed 3’ (HS3). This is the concept of a rail link between Manchester and Leeds decreasing the total travel time between the cities to just 30 minutes. Not only will this bring productivity improvements by way of decreased travel times but also the opportunity for regional stakeholders to get involved. This may be by way of the creation of HS3 or the future sustainability of the scheme and will likely secure a significant amount of jobs for those who are currently finding opportunities for work hard to come by.

Furthermore, the Government has also pledged to reduce Corporation Tax to 17% by 2020. Corporation Tax has already been cut from 28% to 20% in recent years making it currently the lowest within the G20. A further cut will surely make the UK one of the most globally competitive market places for businesses to locate. In doing so this will bring employment, growth and opportunity to the region. The signs are already there that such incentives are bringing new opportunities to the region. Science Central is currently under construction in the West-End of Newcastle City Centre boasting 24 acres of development aimed at promoting science and technology within the region. Newcastle already accommodates world leading science and technology initiatives including Campus North – a programme encouraging digital business start-ups, The Centre for Life – providing world-leading medical research, Siemens – employing thousands of jobs in the region supporting technology and rail development and two National leading universities – Northumbria and Newcastle Universities – creating some of the region’s future business leaders. The North of England has long been considered the home of ‘heavy industry’ however, the promotion of science and technology in the region may suggest the development of a new ‘white coat’ economy within the area. Science Central, and those other similar initiatives, are therefore a significant ‘thumbs-up’ for science and technology development within the region.

Many have suggested that the North is currently heavily sustained by contributions from European Regional Development Fund and without this the North will struggle to sustain growth in the future. Though it is a legitimate point of concern, there are signs that there are initiatives in the pipeline which seek to fill the void this may leave. One of the policies of the 2015 Conservative Government has been to promote the devolution of powers from central government to local authorities, so that resources may be best distributed by regional bodies who have a greater sense of know-how as to areas which most need it. The effects have already been felt in some areas across the North. The Greater Manchester Agreement has delivered not only its first mayoral election, to take place in 2017 but has also secured significant investment in the local economy. This has included a £300 million Housing Investment Fund, powers to share autonomy for health and social care, devolved business and support packages and a consolidated transport budget. Within the North East, similar initiative are already in their infancy such as the North East Combined Authority (NECA), a strategic authority with combined powers over the local economy, transport, development and regeneration. The NECA have recently published targets for securing initiatives in the area creating £400 million investment and 8000 further jobs.

Overall, despite the initial uncertainties which manifested out of the vote for Brexit, there are signs that the Northern Powerhouse will continue to grow and develop with new and exciting opportunities. There are also signs that the Northern economy is beginning to diversify into new industries a world apart from its traditional ‘heavy industry’ heritage. The signs are there that the ‘Fog on the Tyne’ may soon lift and with it reveal the new ‘Local Hero’.

Matt R

 

This post was written by Mathew Robinson. Mathew is a final year MLaw student at Northumbria University and has secured a training contract with Bond Dickinson for when he completes his studies which he is looking forward to. Mathew is a big Middlesbrough FC fan and in his free time can be found on the football pitches around Newcastle.