This guest post is written by James Ramsbotham, Chief Executive at the North East Chamber of Commerce.
2018 is set to be truly challenging, yet potentially rewarding, year for the North East.
In November it was announced that Newcastle, North Tyneside and Northumberland would unite under one authority to spearhead North of Tyne devolution.
Having increased autonomy in the region, as has been proved in Tees Valley, can help us determine our own futures more effectively and gain investment, which will help combat three challenges of Brexit: Investment, Trade and Employment. The North East is a net beneficiary of European funding; we receive more than we put in, particularly in regeneration and development projects. It is expected these funds will diminish as we leave the Union. But, reflecting on the autumn budget of 2017, we see a higher share of regional funding and projects going to those devolved and with elected mayors. This is key to making the North East a more attractive region for both investors and workers to operate and, in turn, creating a stronger North East.
Meanwhile, 2018 also marks a crucial negotiating period for Brexit. Having agreed on withdrawal terms, the government is set to negotiate a new trade relationship with the Union. The UK is committed to a “bespoke and ambitious” trade agreement, one which will allow frictionless trade with zero tariffs, while maintaining an independent regulatory framework. However, the EU has been highly critical of this position, steadfast in the view that Britain cannot “cherry pick”. In short, the EU won’t compromise freedom of Labour for free market access. Trade talks will prove an immense challenge in the negotiations.
Yet, the European Union remains so important to the region, with 60% of regional exports going there, it means we export more goods per capita to the EU than anywhere else in Britain. It is obvious to see why it is so important to get the best deal for the North East, but also to expand our global market.
Despite this potentially looming challenge, the government has been far from clear on its Brexit position. The lack of clarity for businesses trying to prepare for the post-Brexit environment only serves to potentially undermine business confidence in the region. Private investment is down, and among strategy reviews, 40% of small-medium businesses have no plans to invest. A bad deal, coupled with lacking investment, could force multi-national companies to leave the region, which would be the biggest economic disaster for the region since deindustrialisation.
This presents a unique opportunity through devolution. The Department for International Trade (DIT) has announced its commitment to help the new authority, along with the announcement of a potential regional export commissioner. By increasing support for exporters, even at a local level, business will be able to reach new markets and opportunities beyond Europe. This would have the potential to increase regional prosperity and innovation, thus developing a stronger business environment.
Not only this, but a local devolved authority will have better knowledge of the challenges and concerns of businesses in the region, and will allow for a tailored, more efficient strategy to increase prosperity in the region.
Finally, the North East working population will obviously age. Brexit will restrict access to the European labour market, while firms in bigger cities, i.e. London, will look for more nationals to fill the void left by EU workers, harming regional graduate retention. Through devolution, a regional pragmatic strategy will help us emphasise and realise the career opportunities in the region, and create the right environment to keep, or attract, top professionals in the region.
There are challenges to be had in the Brexit and devolution process, however, if we can grasp this chance with both hands, there are some truly great opportunities to make a stronger and more prosperous North East.