11 July 2017

Financial Times: Brexit-voting UK north-east is most reliant on EU services market

The north-east of England voted 58 percent in favour of leaving the EU but is also the part of the UK that is most reliant on the European bloc as a market for its services, according to the Office for National Statistics.

[...] The north-east, where voters in 11 out of 12 county council areas voted Leave, sent half its services exports to EU member countries in 2015, making it the region with the highest proportion of such exports going to EU member states.

The latest ONS analysis of the export destinations of UK services, which constitute the majority of Britain’s economic output and include industries from science and IT to real estate, comes shortly after Michel Barnier, the EU’s top negotiator in Brexit talks, warned that “frictionless trade” between the EU and UK “is not possible” once Britain has quit the 28-country bloc.

The EU was the main destination for British services exports, receiving 37 per cent — £36.9bn — of the total.

According to the ONS figures, showing for the first time where service exports from the UK regions ended up, London contributed the highest value of service exports to the EU — 42 per cent of the £15.6bn total.

But the capital had a more balanced services export base than some other UK regions, such as the West Midlands and north-east, where service exports were heavily EU focused.

While over a third of London’s service exports went to the EU, more than a quarter were destined for the Americas and another 16 per cent for Asia, Australasia, Oceania and “rest of the world”. London generated almost half of services exports to the Commonwealth, totalling £9.8bn from across the UK.

By contrast, the north-east sent exactly half its services exports to the EU but just 17 per cent to the Americas. [...]

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