THE economies of both Tunbridge Wells and Tonbridge will suffer in the coming years due to Brexit, a new report by the London School of Economics claims.
Titled The Local Economic Effects of Brexit, the study shows every authority in the UK will see its prosperity curtailed regardless of whether it is a ‘hard’ or ‘soft’ Brexit.
According to the report, if the UK was to undertake a ‘hard Brexit’, then in the ten years after crashing out of the EU the economy of Tunbridge Wells will be 2.6 per cent smaller than if it had stayed in.
‘Hard Brexit’ is defined as leaving without a trade deal and relying on World Trade Organisation rules – which would incur tariffs on many sectors and products.
Under a ‘soft Brexit’, defined as the UK remaining in the Single Market and negotiating a deal like Norway with tariffs remaining at zero, the economy will be 1.2 per cent smaller.
In Tonbridge & Malling, the predictions are 2.3 per cent and 1.1 per cent smaller, respectively.
As well as tariffs, the report takes into account ‘non-tariff barriers’, such as regulations, affecting British trade, which are estimated to increase as policies between the UK and EU diverge. In contrast, its authors assume further market integration within the EU would make the internal market more efficient in the ten years after Brexit.
In essence, the UK, and by extension local authorities, will also miss out on growth opportunities.
However, co-author Henry Overman said the report ‘is not a prediction of a big recession’ as it is formed from ‘predictions relative to trend’ over a decade.
With that in mind, the economy of Tunbridge Wells borough, last estimated as having a GVA [Gross Value Added] of £3.28billion in 2015, is not going plunge by £85.4million – or 2.6 per cent – the moment the country leaves the EU under a ‘hard Brexit’ scenario, as has been reported in other media. But it will be 2.6 per cent smaller over the course of a decade than it may otherwise have been if the referendum vote had resulted in the UK remaining.
The report’s authors, who work for the university’s Centre for Economic Performance, state they have modelled their estimates on ‘medium to long run impact of changes to trade costs’, and have ignored effects on innovation, immigration and inward investment.
Estimations of the impact on local authorities stem from the centre’s research on the expected impact of Brexit on each economic sector. Therefore, areas such as London – and by extension Tunbridge Wells and Tonbridge – with high exposure to finance are going to suffer more than generally poorer areas with more basic industries.
But the report notes that although they would be hit harder at first, ultimately it is the richer areas that tended to vote remain – who have more diverse and highly trained workforces – that will recover faster and succeed more in post-Brexit Britain.