the global investor
The implications of Brexit for the
UK Economy
N
ow the United Kingdom has finally left the European Union, but what does the British economy have in the future? After a recent LSE forum, Gerard Lyons, Vicky Pryce, and John Van Reenen raised questions on the economic impact of Brexit from LSE staff, students and members of the general public. Much attention was paid to the economic impact of Brexit including inflation in the UK (can also be checked on calculators.tech), but most votes for Brexit come from outside of the country. What is Brexit going to provide for the people living in these areas? We talked to Gerard Lyons is an Economist (British)- He is also a co-writer of Clean Brexit: How to Make a Success of Leaving the European Union. Vicky Pryce who is an Economist (Greek) and former Joint Head of the United Kingdom's Government Economic Service and John Van Reenen- Professor of Management and Economics at the Massachusetts Institute of Technology (MIT). Vicky Price: This was after the vote that people in London decided to show how they were different from the rest of the United Kingdom and how much they voted in the referendum. London was recommended to have its own immigration policy. Some people have actually created articles on what can be achieved for London alone. In many major cities, of course, the vote was like London and substantially different from other places in the country. And I must confess, I live in London and maybe we haven't really seen what happens outside the capital. What the government is now planning is to really change this and 62
ensure that these northern areas are profitable. We have already seen their commitment to helping the Flybe airline in national matters. Remember many people are concerned about state aid to say that you can't do what they do as EU members for Flybe–it's, in any case, addressed to the EU. But you can also do different things for the areas that are allowed. State aid has always been used as a reason to avoid money being given to certain sites. But what has changed in the last ten years has been that the money going to the regions has been significantly reduced.The Regional Development Agencies (RDAs) have been dropped. They were substituted by what are referred to as local business alliances (LEPs), which effectively put together different actors from specific regions.
John Van Reenen: One little aspect I just want to write. They claim the people in the North have supported Brexit. Okay, there was a Brexit alliance. Many of the electors were traditional Conservatives residing in the affluent countryside, and they are not only those who reside in the northern regions.
They didn't necessarily know what they were doing, and for quite some time they received very little income. This takes a long time for this to be resolved and many of the regions that have voted Leave are impacted by the loss in productivity.We will be very unfair, where everyone else is relegated, and the world is so much more complicated.
What's going to happen? They'll be worse off. For example, residents in Sunderland, where the Nissan car plant is based, are potentially worse off as more development shifts out of these places. It will be the reverse of what those voters in conventional Labor regions that voted in favor of Brexit endorse. Such men, due to Brexit, would, unfortunately, be worse off.
I believe that due to the needs of those countries, any infrastructure spending should take place. But the effect on those areas is going to be so lengthy that it is virtually wasted of time and money. It might be viewed as something optimistic, but without a major repartition–one that really impacts London really badly we won't just see an effect on northern areas, so I believe there will be a great disappointment for people living in them.
Gerard Lyons: The National Statistics Service encompasses the United Kingdom in 12 areas. Of the 12 countries, 3 voted Remain: Northern Ireland, Scotland, and England. Leave was voted by nine other states: Scotland and the 8 areas in England beyond Town.The 8 areas were the most Euro-enthusiastic and the most Eurosceptic from 1975 and the first referendum to the 2016 referendum.
www.theglobalinvestor.com
