Brexit: what does it mean for local business?

After all the joy, sorrow, celebrations and recriminations Brexit is finally upon us.

Or to be more precise, the start of Brexit is. This week Theresa May fired the starting pistol of Article 50, officially informing Brussels of the UK’s intention to leave the European Union.

The long process of decoupling from the EU will now no doubt be played out in negotiating rooms, diplomatic soirees and the pages of the press for the next two years. The Brexiteers are rejoicing the UK’s unshackling from the bloated European Project. The Remainers are fearing the country is facing self-inflicted disaster. Only time will tell who, if either, is right.

The scale of the task facing the Government is certainly not to be underestimated. The UK now must work its way through 80,000 pages of EU agreements, deciding which parts to keep and which to jettison. But what does Brexit mean for Hull and East Yorkshire and where do the region’s businesses stand on our impending European divorce?

According to a survey by the Federation of Small Businesses (FSB) 61 per cent of small exporting firms in Yorkshire say maintaining access to the EU single market should be a priority for the UK after it leaves the EU.

The Keep Trade Easy survey also reveals the threat that the introduction of new tariffs following Brexit poses to the region. More than a third (34 per cent) of exporters surveyed say tariffs play a role in their decision-making on where to trade. Nearly one in five (18 per cent) would be deterred from exporting to the EU by a tariff of any size.

With evidence to show that the UK’s exporting small firms have significantly higher turnovers than those who do not engage in cross-border trade, the FSB is calling on the Government to provide the easiest and least costly access to both EU and non-EU markets.

Small exporting firms in Yorkshire want to maintain access to the EU single market

 

 

Research by workforce experts the ManpowerGroup also suggests that employment optimism in the Hull and Humber region dipped in the weeks leading up to the triggering of Article 50. In its Employment Outlook Survey (EOS), the company said outlook for the region was down three points to +5 per cent, matching the national average.

Amanda White, head of specialist markets for ManpowerGroup, said the arrival of green energy giant Siemens had given the engineering and manufacturing sectors a boost in the region while the City of Culture celebrations had provided a welcome fillip to the hospitality industry, but an air of caution still pervades the local economy.

“Hiring in Yorkshire is slowing down as we approach the triggering of Article 50, echoing the more cautious national outlook,” she said. “However, there are still plenty of opportunities in the region's call centres and we're also seeing competition to find candidates for more technical roles. Jobseekers are increasingly reluctant to commute long distances so employers are having to dig deep into local talent pools to find the people they need. Some employers are becoming more open to taking on staff with less relevant experience and offering on-the-job training to bring them up to speed."

The EOS is based on responses from 2,119 UK employers and asks whether they intend to hire additional workers or reduce the size of their workforce in the coming quarter. The survey is used by the Government and the Bank of England an indicator of the health of the economy. Mark Cahill, managing director of ManpowerGroup UK, said: “The trigger of Article 50 is clearly affecting confidence in the jobs market.

“The private sector plans to hire at its slowest rate since 2014 (+4 per cent), with only construction, manufacturing and transport and communications planning to hire at previous levels. The employment rate is at its highest level since records began in 1971, but if you lift the bonnet to look at the engine of the economy, job creation has slowed and employers are becoming more cautious. The companies which have powered Britain's economy through the immediate post-referendum period are easing off the gas.”

With the Hull electorate voting nearly two-to-one for Brexit (76,646 to 36,709) the public appetite for Brexit often seemed at odds with local businesses, many of who backed remain.

Siemens publicly called for a remain vote while Lord Haskins, chairman of the Hull-based Humber Local Enterprise Partnership (LEP), said  Brexit would be a "disaster" for Hull and the Humber.

But Brexit minister David Davis MP has sought to calm nerves that a “hard” Brexit with no deal in place would cause major damage to the UK economy. Speaking at the Brexit select committee, Mr Davis shrugged off “doom laden” forecasts of leaving the EU without a deal in place, saying it was “not as frightening as some people think”.

The Haltemprice and Howden MP said a “Plan B” is already being worked on in case of a no deal Brexit – but a free trade agreement was the preferred result. He said:

“In the event we don't get a deal we will have a fairly extensive contingency plan which is already underway. And we will have, whatever happens, a sharply improved access to the rest of the world off the back of a large number of free trade agreements which will be coming into effect shortly after we leave. No deal is by no means the worst possible outcome, by no means. It is not as good an outcome as a free trade, friction-free open agreement.”

Time will tell what the outcomes are for local businesses in Hull and East Yorkshire. 

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