A study has shown that successful cities with large high-skilled service sectors, mainly located in the south of England will be hit the hardest, irrelevant of a hard or soft Brexit. The increase in tariff and non-tariff barriers that Brexit could bring could cause this in areas specialising in knowledge-intensive sectors such as businesses and financial services.
The report was done by think tank Centre for Cities and the Centre for Economic Performance (CEP) at the London School of Economics (LSE), who also believe that those cities are better placed to adapt to some of the economic shocks ahead after Brexit.
The study has looked into the possible outcomes of both a hard and soft Brexit ten years after the implementation of new trade arrangements. It is thought a hard Brexit could result in an average reduction of 2.3 per cent in economic input across all UK cities compared with a soft Brexit, which would result in a 1.2 per cent decrease.
In the research, a soft Brexit is defined as a scenario in which the UK joins a free trade area with the EU, while hard means the UK and EU don't have a free trade area and the default trade position is to trade under World Trade Organisation rules.
Brexit is also likely to have an indirect effect on cities in the North, Midlands and Wales whether a soft or hard Brexit is decided. These cities have low numbers of high-skilled workers and smaller knowledge-intensive private sectors, leaving them less likely to experience problems from a potential post Brexit downturn, but more vulnerable to economic shocks.
Chief executive at Centre for Cities, Andrew Carter summarised:
"Contrary to much of the received wisdom on Brexit, it is the most prosperous UK cities which will be hit hardest by the downturn ahead – but poorer places across the North and Midlands will find it tougher to adapt."
