Bouncing Back from Brexit

How has Brexit already affected key sectors of our economy and society? We look at business, transport, tourism, health and the arts to get a snapshot of how each of them is already faring now the UK has left the European Union, and look at how our city and region can bounce back in a post-Brexit and post-pandemic world. Written by Rob James.

And so it has come to pass. Five years since the people of Britain made their choice through a bitterly contested referendum, the UK has left the European Union.

Three months into that departure and the media is already highlighting the stories which have shown the impact – British fish rotting because of the delays in exporting the catch, finance companies opting for Amsterdam rather than London, and calls – and threats – to change the Northern Ireland Protocol – which means some goods from Great Britain have to be checked before entering the province, where EU customs rules still apply.

January alone saw a 40% drop in exports to the bloc, worth £5.6bn, as small businesses like the Stilton-makers of Hartington struggled with the cost of new paperwork.

On the other hand, the roll-out of the coronavirus vaccine has been hailed as a triumph in the UK when compared to the pace of distribution on the continent.

The issue remains as divisive as ever.

But what is the likely impact of Brexit on the various sectors that our own region’s economic, social, and cultural life depends upon?

When the UK voted to join the bloc in 1973, the decision helped stem worries that reliance on the Commonwealth markets was adversely impacting its economy, relative to the rapidly emerging European nations, then just six of them, who made up the European Community.  

After four decades of economic stability, but much political volatility over the UK's membership, the 2016 referendum was an attempt by former Prime Minister David Cameron, faced with calls from within his own party and the rise of grassroots movements such as the UK Independence Party, to resolve the issue once and for all. It did, and ended his premiership with it.

Trading in a new global market

The reasons for the decision to leave are many and varied, but among those left reeling from the result were many in the business community.

Trade and infrastructure would, therefore, seem to be the most important places to start to assess the legacy of Brexit on the region, and Scott Knowles, Chief Executive of the East Midlands Chamber, is upbeat about the prospects of local exporters finding new markets, despite initial concerns about the loss of skills, competitiveness, and the relationship with the UK’s biggest trading partner:

“Pre-pandemic, a lot of concerns companies had were practical ones – for example, how competitive UK businesses would be in a post-Brexit environment. What we’d seen immediately after the referendum, and then for several years, was a relatively weak pound against the euro, so East Midlands businesses seemed extremely competitive, but there was a concern that that might, ultimately, not continue.

“We had many sectors in Derby, Derbyshire and the wider East Midlands that rely on a European workforce or skillsets from Europe which in some cases can’t be found locally, and there was a real concern that that wouldn’t be available, and I think that has been proven partly correct, to a degree.”

While Europe clearly remains the East Midlands’ largest trading partner, businesses wasted little time in looking for new markets, particularly across the Atlantic and North America as a whole, not just the USA, if only to ensure they had a contingency if trading with Europe then became more problematic, or UK businesses were seen as less welcome, he explains.

There are also regional strengths in both new and traditional sectors that remain strong, argues Scott, which will help ensure the East Midlands can extend its global reach.

“We’ve got an emerging sector in Derby around augmented and virtual reality and holography, and across the whole region we’ve seen some businesses in those sectors really grow and start to scale up.

“We’ve got a really strong manufacturing spine; we always have had here. It’s not always precision engineering, there are more traditional manufacturing firms, but we have a very good cohort in that sector.

“While it feels tough at the moment for lots of businesses, ultimately, I think Derby, Derbyshire and the East Midlands are well-placed in terms of continuing to grow.

“Our business community is extremely resilient, creative and innovative, and while Brexit, like the pandemic, is another challenge, it also creates opportunity as well.”

Scott Knowles, CEO of the East Midlands Chamber, facing the camera, wearing a suit and tie and with his arms folded.

While it feels tough at the moment for lots of businesses, ultimately, I think Derby, Derbyshire and the East Midlands are well-placed in terms of continuing to grow.

Scott Knowles
Chief Executive, East Midlands Chamber

Keeping the Midlands moving

To realise those opportunities, companies need efficient ways of getting materials from their suppliers and goods to their customers. The referendum result in 2016 suddenly raised the question of how businesses would physically get goods in and out, never mind the new bureaucratic burdens.

The responsibility for that lies with agencies such as Midlands Connect, which oversees the strategic development of transport and infrastructure across the region.

“The first thing that came into our mind is what would that mean in terms of the role of our international gateways and infrastructure around them,” Midlands Connect CEO Maria Machancoses explains.

“For some time the national debate has always been around how to expand Heathrow Airport, while investment in ports was heavily concentrated on those in the south-east.

“If Britain was going to go on to the global stage, was there an opportunity to make sure that businesses in the Midlands were also able to access a wider market without having to travel to London?”

The agency has been working with businesses across the region to overcome the barriers that prevent them from connecting quickly to entry and exit points, such as East Midlands Airport, the UK’s largest air freight hub, and the seaports of the north Lincolnshire coast.

“We wanted to know how we could maximise, first of all, the international gateways in the Midlands. Secondly, we felt that there was going to be change in how manufacturing and the supply chain positioned themselves in terms of innovation and technology.

“So, with any proposals for transport investment we had to ask, ‘which are the ones we should back to support our supply chains and manufacturers?’”

The HS2 high-speed rail route from south to north, which has sparked much national debate, is one such project which Midlands Connect not only supports but aims to make the most of by upgrading the connecting east-west passenger and freight routes to boost the economy.

And there was a further shot in the arm in the Budget announcement in March, as the Chancellor Rishi Sunak confirmed that East Midlands Airport would become one of the nation’s eight freeports (which also include the region’s main shipping port on the Humber estuary).

These tariff-free, low-tax zones are hailed as important catalysts for regeneration, attracting investment and jobs. The success of the bid for freeport status depended on each project’s ability to meet the government’s ‘levelling up’ agenda, which aims to invest in infrastructure which has a “visible impact on people and their communities” – just as funding from the EU had done over the past few decades.

Even so, agencies like Midlands Connect are operating within a new(ish) arena of competition, with the different English regions vying to host ambitious companies who want to expand their international markets in the post-Brexit world. Good transport links and access to centres of new technology and innovation will be key to many of those boardroom decisions.

“Derbyshire is heaving with big global firms, like Toyota, Rolls Royce and Bombardier, that will want to retain a global presence,” explains Maria.

“We don’t want them to go to the north or the south, we want them to stay in the Midlands, and our role in Midlands Connect is to make sure the government understands this. It’s a massive task, but we can’t afford not to.”

Picture of Maria Machancoses, CEO of Midlands Connect, seated at a table with a printed top, smiling at the camera.

Derbyshire is heaving with big global firms who will want to retain a global presence. We want them to stay here, and it's our job to make sure the government understands this.

Maria Machancoses
CEO, Midlands Connect

A blow to tourism?

One of our other greatest exports to - and imports from - Europe is tourism, but the freedom of movement we once mutually enjoyed is now gone. While a visa is unlikely to be required for most of us to visit the Spanish Costas on holiday, it will be if we now plan to stay for three months or longer.

Despite the structural arrangements - and additional costs - which may factor into our holidays, Brexit is only one of a number of issues which are going to have a profound effect on the tourism industry for some time, argues Professor Haywantee Ramkissoon, Head of the Visitor Economy Research Group at the University’s Derby Business School.

“UK and EU tourism has been spatially inter-dependent, but Brexit has brought important implications with the barriers,” she says.

“Tourism has been heavily impacted by the pandemic, and may be further impacted by political, geographical, cultural, economic, and environmental changes.

“Brexit and Covid-19 will require more constructive debates on how to promote the development of the tourism industry for a sustainable future.”

Tourists walking through an airport departure lounge with planes in the background.
Brexit is only one of many factors that are likely to impact tourism in future.

Will NHS recruitment take a hit?

The pandemic has also underlined the need for international co-operation on tackling health threats, and though there are no quotas or tariffs under Brexit on imported medicines and supplies, there are still new rules to navigate.

But what of the staff who provide the care we need if we are admitted to hospital? In 2020, there were around 67,000 EU nationals working in the National Health Service, which, while still desperately short of the workforce numbers it needs, has endured and responded to the unprecedented demands of coronavirus over the past 12 months, just as a new points-based system is taking effect to govern the recruitment of skilled staff from overseas.

Professor Stephen Wordsworth, Head of the School of Nursing and Professional Practice at the University, believes that most healthcare workers will meet the recruitment criteria, while those who have traditionally come here to work in social care may not. But although the jobs may exist for those who are qualified, there is no guarantee essential skilled workers will come from Europe in the same numbers as before.

“The NHS has a long and successful history of recruiting overseas staff from beyond the EU, and we are likely to see this continue,” says Professor Wordsworth.

“Even with the points-based system which will allow them to work in the UK, the key question is whether EU-qualified health workers will still want to come to work in the UK. Will they find it attractive? Will they feel they want to commit to living in the UK from the point of view of a post-Brexit climate?”

Despite the change to the status of EU students and the more complex international visa rules that will now apply to them when seeking to study nursing and healthcare here, UK universities are still keen to recruit from Europe.

“We at Derby, and the sector as a whole, have lots of experience of this,” Professor Wordsworth says of the international student recruitment rules.

“It still remains to be seen whether international students will want to study in the UK, but the early indications are positive.”

And how will our arts sector fare?

And from health to leisure. What of the arts? With audiences gone and venues closed, productions, concerts and exhibitions cancelled during lockdown, an important source of funding was also removed when the UK exited the EU ‘stage left’.

Unlike Derby, not every community has an award-winning theatre, but most have a demand for some cultural outlet among their residents, whether that be for visual or performance art.

“Recent studies have highlighted both the financial, and thus existential, threat to the arts as well as the potential dilution of the creative and collaborative diversity of the sector,” said Professor Keith McLay, Pro Vice-Chancellor Dean of the University’s College of Arts, Humanities and Education.

“At the turn of the year, Britain’s eligibility to access grant funding from the EU’s Creative Europe ended, thereby removing monies which, since 2014, had been worth an average of 18.4 million euros.

“Creatively, and for productive output, the sector worries about its ability to hire and collaborate with EU arts and cultural sector due to Britain’s withdrawal from the Single Market and the post-Brexit Immigration Act.”

Professor Keith McLay addressing a lecture theatre audience while standing in front of a screen with an image projected on to it.

Creatively, and for productive output, the sector worries about its ability to hire and collaborate with the EU arts and cultural sector.

Professor Keith McLay
Pro Vice-Chancellor Dean of the College of Arts, Humanities and Education

Nevertheless, he remains cautiously optimistic that the nation’s “creative impulses” may shine again.

“Arts Council England is alive to the need for a funding replacement for Creative Europe and has, during the coronavirus pandemic, demonstrated its understanding that subsidy and grant funding is not just a ‘nice to have’ for the sector but elemental to its sustainable diversity.”

Professor McLay points out that the novelist and journalist James Meek has written that much of the narrative behind the Vote Leave campaign was based on a cultural myth of Britain emanating from the legend of heroic St George slaying the EU dragon. 

In a sentence that could probably apply to more than one part of our society and economy, Professor McLay suggests: “The possibility of the sector framing an alternative myth and story for Britain’s identity in the post-Brexit cultural landscape, that of a phoenix rising, opens, albeit tentatively.”