UP to 2,500 jobs could be lost and Sunderland’s economy could be set back years if the UK votes to leave the EU next month.
Those are among the findings of a major independent, non-political study published today by Sunderland Economic Leadership Board.
The board commissioned internationally recognised consultants, PACEC to explore the likely economic impacts of a leave vote in light of the unique issues facing businesses, employers, and investors in Sunderland.
PACEC employed a mix of data analysis methods and economic scenario planning techniques to determine the likely outcomes. In addition to the economic modelling, key stakeholders were interviewed and almost 200 local businesses surveyed.
Paul Callaghan, who chairs Sunderland Economic Leadership Board, said: “The Economic Leadership Board hopes the research findings will help stimulate debate and provide evidence and insight into the potential outcomes if the referendum result on the 23rd June is in favour of Brexit.
“The report shows that given the importance of foreign investment and trade to the Sunderland economy, the consequences of Brexit would be significant and largely negative for the city. Sunderland’s economy is dominated by large, foreign-owned companies in trading/exporting sectors, most notably the automotive manufacturing cluster centred on Nissan’s Sunderland factory.
“It examines the likely outcome were the UK to secure a trade deal similar to that of Norway, which is not an EU member but enjoys free trade subject to meeting certain EU regulations, and what would happen if the UK failed to secure a deal and as a result faced trade tariffs set by the World Trade Organisation (WTO).
“And, it concludes that under either the Norway or the WTO option, the Sunderland economy would contract, by as much as -2.5% in Gross Value Added (GVA) terms, and -2.18% in employment in the case of WTO terms of trade. This equates to the loss of around 2,500 jobs.”
The research also highlighted the potential negative consequences that Brexit would bring in terms of regeneration funding. Since 2007, the city has received over £23m of direct investment from Europe, complemented by over £130m of region-wide business support services accessible to a wide range of Sunderland businesses.
Projects benefiting from this direct support include the Port of Sunderland, Sunderland Software City and Sunderland Software Centre, the A19 Enterprise Zone, Enterprise Coaching, Washington Business Centre, Sunderland Social Housing Low Carbon Demonstrator, Keel Square including Vaux advance infrastructure works and various projects led by the University of Sunderland.
If the vote is to leave, it is not clear whether substitute funds will be made available on anything like the same scale to continue the regeneration of the city.
In relation to investment and trade, the report highlights the worst-case scenario of Britain leaving the EU and not securing favourable market access resulting in a serious loss in competitiveness that could undermine current foreign investment aimed at serving the EU market and reduce overall investment over the longer term.
It also highlights the potential impact on inward investment, the automotive sector, local businesses, the global status of the city, and overall plans for the city’s economic regeneration.
Welcoming the report’s findings, Paul Callaghan said: “This research provides real evidence that should the UK vote to leave the European Union, the consequences for Sunderland will set the city back years on its road to economic fulfilment.
“Because of our current attractiveness to foreign investors, losses in trade and investment will be felt more strongly in the city than the UK as a whole.”
Councillor Paul Watson, Leader of Sunderland City Council, added: “The report highlights the real consequences for our city if the UK does not vote to remain in the EU – the impact on local jobs, on inward investment, on business growth opportunities, and on the city’s international reputation as a centre of manufacturing excellence will all be undermined.
“The North East is a net beneficiary of the EU, if we do decide to leave EU the money we currently pay in won’t come back to the North East. So a decision to leave the EU could seriously hinder the short and long term growth prospects for our city.”