North ‘to be hit hardest’ by Brexit

BREXIT has damaged Britain’s competitiveness, reducing productivity and workers’ real wages in the years ahead, according to a new study – and the North East is expected to take the hardest hit.

The Resolution Foundation said leaving the EU has reduced how open and competitive Britain’s economy is.

And the North East’s reliance on exports to the EU leaves means the region’s economy will suffer the most, they added.

The report, in collaboration with the London School of Economics, said the immediate impact of the referendum result has been clear, with a “depreciation-driven inflation spike” increasing the cost of living for households, and seeing business investment falling.

The UK has not seen a large relative decline in its exports to the EU that many predicted, although imports from the EU have fallen more swiftly than those from the rest of the world. The report said Britain has experienced a decline of 8% in trade openness since 2019, losing market share across three of its largest non-EU goods import markets in 2021, the US, Canada and Japan.

The full effect of the Trade and Cooperation Agreement will take years to be felt but the move towards a more closed economy, say the authors, will make the UK less competitive.

The research estimated that labour productivity will be reduced by 1.3% by the end of the decade by the changes in trading rules alone, contributing to weaker wage growth, with real pay set to be £470 per worker lower each year, on average, than it would otherwise have been.