As London business creation outstrips the regions, loss of vital investment could be devastating
Jenny Tooth OBE, CEO of the UK Business Angels Association, outlines just why a trade deal must be secured to appease the needs of regional business
In 2019, the independent UK 2070 Commission declared the British economy to be one of the most imbalanced in the developed world. Over the last decade, business growth has been indicative of such disparities. The number of businesses only grew by 4% across the decade in Northern Ireland, and by 16.5% and 17.1% in Scotland and Wales respectively. This is in stark contrast to London, where we saw a growth in the number of business by 51%. Evidently, more needs to be done by central and regional governments to entice domestic and both current and future foreign investors to regional businesses to support local economies, jobs and skills, particularly after the UK leaves the EU.
The government’s pledge to “level up” the UK has been touted as a central policy to Boris Johnson’s premiership, with government interventions in FlyBe and Northern Rail alluding to their initial commitment to this pledge. Although ‘Big Government’ may have been the winner at the 2019 election, regional businesses are still finding themselves dependent on the future trading relationship between the UK and the European Union.
One of the most documented cases of Brexit having a detrimental effect on regional investment has focused on the importance of Nissan to the North East. Nissan have already halted parts of their SUV productions in Sunderland, with further considerations to follow post-Brexit. Most notably however, is whether a free-trade deal will be struck between the UK and the European Union. If not, resulting tariff’s on exports into the EU make production in the UK unviable in the eyes of Nissan.
The issue of damage to supply chains and access to free trade can be felt far more locally too. Keen to remind businesses that the implications of Brexit are far from over after “Brexit Day” on Friday 31st of January, Jenny Tooth OBE, CEO of the UK Business Angels Association, discusses the need for a free-trade agreement to secure the future of regional British SMEs:
“Nissan’s operations in Sunderland serve as a reminder to us all that regional businesses and economies could be devastated if a free-trade deal isn’t agreed between the EU and the UK. We see Brexit as an event that really could go one of two ways. Until we see the details of a future trading relationship between the UK and the EU, we will continue to hold our breath.
Brexit does pose several palpable threats to the economy. Firstly, there are thousands of SMEs based in the regions that are essential to supply chains, serving as the lifeblood for many global businesses. If these global business determine that their operations in the UK are no longer tenable, this will inevitably have an impact on British SMEs; most likely severe. However it should also be noted that innovative SMEs – of which Britain has an extraordinary wealth of – have a knack of spotting opportunities. In the way that British FinTech’s found opportunity out of the Financial Crash in 2008, we could see emergent businesses with robust visions for expansion post-Brexit. Business angels will always be there to support innovation too, using much of their experience and knowhow to steer scale-ups through stormy waters. Our job will be made much easier however if a trade agreement can be struck between the two parties of course.
As an investment community, the UKBAA deal with investors that fell on both sides of the aisle in terms of being in favour of Remaining and Leaving. However, we now all have to focus on what will make Brexit a success for SMEs, particularly in the regions. Boris Johnson has pledged to “level up” Britain’s regions, addressing the issues within our imbalanced economy. Until the Budget however, we can’t say for certain what this will look like. We do however hope that investment pledges are honoured, especially with the loss of Horizon 2020 and Jeremie funding as a consequence of Brexit.”