British exit from European Union would be damaging for North East, according to new report

The study by the Centre for European Reform claims that poorer regions - like the North East - would be hit the hardest if the UK left the EU

Carlos Ghosn, CEO of Nissan
Carlos Ghosn, CEO of Nissan

A British exit from the European Union would make the North East inequality worse because of its dependence on exports, a new report has claimed.

Exports to the EU account for 15 per cent of private sector output in the region, which according to figures is one of the poorest in Britain.

The report - published by the Centre for European Reform - claims that poorer regions would be more affected by ‘Brexit’, a term used to describe the British exit from the European Union, than richer ones, since their economies are more dependent on exports to the EU.

And according to the findings, the North East is most exposed because of its links with Nissan in Sunderland and its suppliers.

Goods exports to the EU make up 11 per cent of the region’s output, while in London, the wealthiest UK region, would be largely unaffected by EU tariffs on goods, as manufacturing makes up a small proportion of its economy.

The report comes after Nissan’s chief executive Carlos Ghosn said the car manufacturer would reconsider its investment in the UK if Britain left the EU.

Labour parliamentary candidate for Newcastle Chi Onwurah said exiting the EU would be damaging for the region’s future economy.

She said: “We have a history of making and building and we know the importance of having access to markets and access from the EU.

“I agree that exiting from the EU would be damaging to the economic future.”

Chi Onwurah
Chi Onwurah

However, Ukip North East MEP Jonathan Arnott said leaving the EU would help regain power to control borders and set up our own policies.

He said: “It’s hardly surprising that a pro-EU think tank is suggesting that leaving the EU would be a bad idea, but let’s look at the evidence. Nissan claimed it would leave the EU if we didn’t join the euro; we didn’t join the euro, and far from leaving it expanded its business here. Ford, on the other hand, closed a plant and moved to Turkey using money from the European Investment Bank.

“As for trade, we’d keep trading with the EU if we weren’t members - Switzerland isn’t in the EU, but does four and a half times as much trade with it per capita as we do. So the idea that being outside the “EU would cost us trade is a nonsense, but like Switzerland and Iceland we could develop our global trade links and create jobs.

“Leaving the EU is as much about trade and job creation as it is about saving our £55 million per day membership or regaining the power to control our own borders and set our own policies on issues like taxation, immigration or crime.”

The study states that without a free trade agreement, the UK could trade with the EU under World Trade Organisation rules.

But the EU would apply tariffs to British goods, claiming it would hit economic activity in poorer regions, where manufacturing tends to predominate, harder than richer ones.

And while London’s large financial and commercial services sector would be badly hit by a British exit from the EU, services make up less than one third of British exports, and services exports to non-EU markets have grown quickly over the course of the eurozone crisis, according to the findings.

Jonathan Arnott
Jonathan Arnott

The report’s author John Springford said: “Many eurosceptics claim that it would be easy to sign a free trade agreement with the EU, to stop tariffs being applied to British goods.

“In fact, the EU would have the upper hand in trade negotiations. The EU buys 45 per cent of Britain’s exports, while the UK only buys 7 per cent of the EU’s, so the EU would be able to dictate terms.

“Any free trade agreement would require Britain to accept the free movement of workers and most of the EU’s rules – just as Switzerland must. Politically, this would be worse than EU membership, since Britain would not be able to limit immigration and would have even less control over EU regulations.

“If Britain balked at such a deal and traded under World Trade Organisation rules, its poorer regions would lose out most.”

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