Safeguarding, certainty and secure funding in post-Brexit Britain
31 January 2020: Rosalia Wood, ICAEW’s Manager for Regional Industrial Strategy, considers what regional economies might look like in post-Brexit Britain.
It’s fair to say that the last 12 months have been turbulent in the House of Commons. The recent General Election has given the UK a degree of certainty, but it's still not clear what the future of its relationship with the EU will look like. But what does this mean for the UK’s regional economies?
The real cause for concern will be the impact that leaving the EU will have on business in the UK regions in relation to the withdrawal of European business funding. Cornwall, for example, will have received around £1.4bn from EU funds by 2020, and this money likely contributes significantly to the region’s Gross Value Added (GVA) figures. A sudden withdrawal of EU funding, without an appropriate substitute, could do significant damage to these regional economies, and while ideas for replacement funds have been outlined by government, more detail is required. With this in mind, over the next few months, ICAEW will be taking views from members on what future business support funds, like the Shared Prosperity Fund, should look like.
In ICAEW's consultation for the Treasury Select Committee’s Regional Imbalances inquiry, poor infrastructure was the biggest bar to regional business growth. Money from the European Investment Bank (EIB) has helped fund major projects like the expansion of the ports of Liverpool and Aberdeen and the second River Severn crossing linking England to South Wales. These crucial investments enable businesses in those regions to improve their logistics operations and support the movement of skilled staff from other areas. The effective wiping-out of such a funding stream post-Brexit could see vital improvements like transport projects shelved.
ICAEW welcomes the Chancellor's announcement that £100bn will be made available for infrastructure projects, but we would like to see a long term impetus behind regional infrastructure development. We believe that one solution to this is the development of a UK Investment Bank (UKIB) as an anchor investor to replace EIB funds, as detailed in ICAEW’s recent response to the Government’s Infrastructure Finance Review.
Put simply, every sector, every business, everywhere in the UK will be affected by the decision to leave the EU. Whether you’re a corner shop owner in Cumbria or work for an accountancy firm in London, the way you do business will change and the key to surviving will undoubtedly be preparation. The government seems to be doing its utmost to communicate the need to prepare businesses across the UK; and ICAEW took part in a multi-million pound “Get ready” publicity campaign launched by the Government in October. However, there is still more to be done to put in place a post-Brexit business funding framework and provide industry with the certainty that there will some form of clear and fully costed succession plan after the UK leaves the EU.
If you’d like to know more about the work ICAEW is doing around economic prosperity in the regions, please contact me firstname.lastname@example.org