The most euroskeptic areas of Britain could be hardest hit if Brexit damages the services industry, according to research from the U.K. Trade Policy Observatory
Northeast England and the West Midlands—where almost 60 percent of voters backed Brexit in the 2016 referendum—send around around half of their services exports to the European Union, authors Ingo Borchert and Nicolo Tamberi said in a report published Thursday.
Inside the EU, service providers like bankers, lawyers and technology firms can sell across the world’s largest trading bloc, mostly without significant barriers. Outside, they could face hurdles such as restrictions in access to some sectors and diverging regulation.
“While London is by far the biggest exporter of services to the EU, it also trades on a huge scale with the rest of the world, so is somewhat protected,” said Borchert, a fellow at the UKTPO. “Other regions are far more vulnerable.”
London and the southeast are nevertheless likely to be “substantially impacted,” the report said, as they account for 62 percent of all services exports.
The economists also calculated the value of services inputs into manufacturing goods destined for export at around 50 billion pounds ($68 billion) annually, equivalent to a year of financial-services exports. The East Midlands, Wales and the northeast have shipped relatively more manufacturing exports to the EU since 2011 than other region, they said.
Services exports in the motor trade sector are particularly oriented towards the EU, while professional services are exported mostly to non-EU destinations.
Separate research from the National Institute of Economic and Social Research last year found, by contrast, that areas that voted to stay in the EU are predicted to be most negatively impacted by Brexit.