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Brexit Facts & Stats

On the 29th March 2019 the UK will officially leave the EU. This will be followed by a “transition” or “implementation” phase to the 31st December 2020 (based on the current timetable). Until then, the Coventry & Warwickshire Chamber of Commerce will be working hard to help members prepare for Brexit and to lobby stakeholders on their behalf.

Our full Business Brexit Toolkit sets out suggestions for how businesses can get “Brexit ready”, facts and stats on Brexit and the region’s relationship with the EU and our asks for stakeholders on both Brexit negotiations and the domestic policy changes that businesses need to thrive.

For the rest of the Brexit toolkit please visit the Brexit Club section of the Coventry & Warwickshire Chamber of Commerce website here.

Key Statistics: Local Businesses & Brexit

 Key Statistics:

  • 247,000 EU Citizens living in the West Midlands
  • 64,000 EU Citizens living in Coventry & Warwickshire
  • 47% of goods exported from the West Midlands go to the EU
  • 62% of goods imported into the West Midlands come from the EU

Among businesses in the West Midlands:

  • 47% believe the UK should aim to stay in both the Single Market and the Customs Union
  • Just 4% believe that UK should aim for WTO Rules or a “No Deal” Brexit
  • 43% identify tariffs as a significant barrier to international trade
  • 38% believe restrictions on the rights of EU nationals to work in the UK would have a negative impact on their business
  • 43% businesses support a Brexit transition period of three years
  • 41% plan to start or grow exports to Western Europe over the next 3 years
  • 35% cite Brexit as a top factor influencing their export strategy
  • 19% only export to countries inside the European Union
  • 22% only import from countries inside the European Union
Brexit and Coventry & Warwickshire: SWOT Analysis

Coventry & Warwickshire and wider West Midlands are home to many strengths and potential opportunities to exploit. However, Brexit throws into sharp relief some of the region’s weaknesses and potential threats on the horizon:

STRENGTHS:

  • Attractive to Investors: More foreign businesses invested in the West Midlands in 2016-17 than anywhere outside London and the South East
  • Exports: Coventry is the 6th highest city for exports per job (£23,430). Only 32% of its exports go to the EU which makes it the 4th lowest in the UK.
  • Excellent Transport Links: 75% of England is within a two hour drive time of Coventry and London can be reached in less than an hour by rail. Birmingham airport is around 20 minutes away by rail or road and serves around 140 routes worldwide.
  • Research & Development: On average each firm in Coventry and Warwickshire spends £15,000 on research and development, that’s more than twice the UK figure of £6,800.

Diverse industry base:  The West Midlands region houses 6,000 advanced engineering firms and accounts for 25% of all automotive production in the UK. Manufacturing accounts for 11% of jobs which remains one of the highest percentages for any region in the country. Coventry & Warwickshire employs more than 40,000 people in advanced manufacturing and is home to the Midlands Aerospace alliance, which is the largest aerospace cluster in Europe.

 

WEAKNESSES:

  • Skills: The West Midlands region has an above UK average rate of unemployment (3.1%) and proportion of the population with low or no qualifications (11.8%). Coventry & Warwickshire’s is 3.7% and 8.2% respectively.
  • Productivity: GVA per hour worked in the West Midlands region is almost 15% below the UK average. Coventry’s GVA (per hour worked) has fallen from 101.3 in 2004 to 85.5 in 2015.

OPPORTUNITIES:

  • Global population: The West Midlands region is home to 204,000 citizens from outside the EU. In Coventry alone, it is estimated that 140 languages are spoken in the city
  • Room to Grow Exports: With Coventry less reliant on exporting to the EU market than other UK cities, future free trade deals will provide further opportunity to increase its already substantial exports to non-EU markets.
  • Host City & Region: Post-Brexit, the Government will need to create, and decide where to locate, new UK focused agencies to replace the EU agencies whose jurisdiction the UK will no longer fall under. Many businesses based in London and the South East may also look to relocate parts of their business to reduce their cost base.

THREATS:

  • Future Access to Talent: There are 247,000 EU Citizens currently living in the West Midlands region and 64,000 across the Coventry & Warwickshire area. The West Midlands’ 10 universities attract over 8,000 EU students each year and employ approximately 5,000 academics who are EU citizens. The details of the UK’s post-Brexit approach to immigration remain unknown.

Future of EU funding: The EU budget for 2014-2020 allocated funding of £765 million for the West Midlands from the European Regional Development Fund (ERDF) and European Social Fund (ESF) alone with €136 million allocated to Coventry & Warwickshire LEP. Over the last three years, universities in the West Midlands have received over £100m in EU funding for research.

  • Future of Trade with the EU: 47% of exports of goods from the West Midlands go to the EU. The region’s higher than average reliance on the manufacturing sector and automotive manufacturing in particular make it even more reliant on trade than other areas. The West Midlands also has one of the highest share of goods imports coming from the EU (62%) only the East, South East and Northern Ireland have a higher proportion.

In summary:

Coventry, Warwickshire and the wider West Midlands are home to a dynamic, growing economy and excellent national and international transport links. The global population of the West Midlands makes it ideally placed to maximise international trade opportunities, particularly outside of the EU, during and post-Brexit and there is significant opportunity to grow the proportion of firms exporting.

Post-Brexit, the UK Government will need to create new agencies to take up the role of a number of EU agencies that will no longer have jurisdiction over our nation. Coventry, Warwickshire and the West Midlands will be ideally placed to bid to host a number of these agencies that reflect local sector strengths, such as the UK equivalent of the European Medicines Agency. We are also likely to see a continuation of the trend of firms moving activities to outside of London and the South East in order to reduce their cost base. Coventry & Warwickshire are ideally placed as more affordable but excellently connected areas to relocate to.

However, the West Midlands region faces challenges in the form of its comparatively low skills base and productivity and high unemployment rate. The region is heavily reliant on the EU as a trading partner and receives significant volumes of EU funding. Brexit negotiations have thrown the future trading arrangements and volume of regional funding post-Brexit into question.

 

Businesses’ Views on Brexit

What are the local businesses views on: The single market and customs union

 

Almost half of West Midlands businesses (47%) believe that the UK’s Brexit negotiations objectives should be to remain in both the Single Market and the Customs Union. 23% believe the UK should aim to remain in the Customs Union only (in order to ensure no hard borders or tariffs, but understanding that there would be limited scope to negotiate trade agreements with third countries). 17% believe that the UK should remain in the Single Market only (accepting  EU regulations and rules in return for full access to market). Businesses are not supportive of a “no deal” scenario. Just 4% believe that the UK should aim to leave without a deal with the EU and leave the Single Market and Customs Union, relying on WTO rules for trade.

June 2017: British Chambers of Commerce Snap Poll on Brexit, West Midlands Responses – 247 respondents

Over a third (36%) of businesses identify Customs Procedures (e.g. checks, declarations) as a significant barrier to trading with their preferred international markets. 10% highlight rules of origin arrangements. These results highlight the importance of ensuring Customs Procedures between the UK and EU are kept as streamlined as possible post-Brexit in order to ensure ongoing trade.

 

Tariffs & Non-tariff Taxation 

43% of West Midlands businesses identify tariffs (taxes or duties on imports/exports) as a significant barrier to trading with their preferred international markets. Almost a quarter, 22%, highlight non-tariff taxation (tax arrangements between countries, VAT, royalties and dividends) as a significant barrier. These highlight the impact tariffs and non-tariff taxation can have on businesses’ appetite to trade internationally.

October 2017: British Chambers of Commerce International Trade Survey, West Midlands Responses - 222

 

Standards, Certification, Compliance & local regulation 

Almost a fifth (19%) of West Midlands businesses identify product standards, certification and compliance as a significant barrier to trading with their preferred international markets. 16% identify local regulations in the  country of export/import (e.g. law relating to employment, competition procurement, ownership conditions, etc.). These highlight the importance of shared standards and approaches to regulation to facilitating international trade.

October 2017: British Chambers of Commerce International Trade Survey, West Midlands Responses - 222

 

Free Movement of People 

The majority of West Midlands businesses do not believe that they would be impacted by any future restriction on the rights of EU nationals to work in the UK (54%). Over a third (38%) believe it would have a negative impact with 20% identifying slight negative and 18% identifying a significant negative  (18%) impact. Just 5% believe it would be positive for their business with 2% identifying a significant positive impact and 3% a slight positive impact.

August 2017: British Chambers of Commerce Workforce Survey, West Midlands Responses – 205 respondents

 

Recruiting EU Citizens 

Just under 2 in 5 (38%) of those polled said they had employees from other EU countries, with 22% of respondents saying they represented 1-9% of their workforce. Nearly half (48%) of West Midlands businesses receive job applications for roles within their company from the EU or the rest of the world. Only 3% of West Midlands businesses surveyed said they used recruitment agencies elsewhere in the EU.         

If EU nationals were to face future restrictions on their rights to work in the UK, just 6% of businesses said they would respond by paying additional costs to recruit from the EU (if possible). 41% of businesses said they would not be affected and almost one fifth (19%) said they would focus recruitment on UK workers.

August 2017: British Chambers of Commerce Workforce Survey, West Midlands Responses – 205 respondents

 

A Brexit Transitional Deal 

Nearly half (43%) of West Midlands based businesses believe the transition period should last for three years.  Around a sixth (16%) of the businesses surveyed felt the transition period should last longer than three years, with less than a quarter of respondents (24%) stating there should be no transition period whatsoever. These results highlight the need for a transition period to help businesses adjust to the new trading arrangements.

June 2017: British Chambers of Commerce Snap Poll on Brexit, West Midlands Responses – 247 respondents

 

Trading with the EU 

Almost a fifth of West Midlands based businesses (19%) export exclusively to the European Union, with over half (55%) saying they export both inside and outside the EU. Just 2% of businesses exported solely outside the EU.  The results were similar for imports, with 22% importing from inside the EU only and 53% importing from inside and outside the EU. Only 4% of businesses import exclusively from outside the EU.  

Exactly a quarter of the businesses surveyed reported increased export sales to Western Europe over the past year, with 23% saying imports had increased from the region. Less than a third (27%) of businesses said they did not export in any capacity to Western European markets.  Nearly 1 in 5 (19%) businesses surveyed reported increased export sales to Central & Eastern Europe, with 11% recording increased imports from the region. Over 2 in 5 (41%) businesses stated they plan to either start, or will continue exporting to Western Europe over the next three years, and 35% of respondents selected ‘The UK’s future withdrawal from the EU’ as a primary factor influencing their export strategy for the next 3 years.  

October 2017: British Chambers of Commerce International Trade Survey, West Midlands Responses – 222

 

The Governments approach to negotiations 

Nearly two in three (61%) businesses disagree to some extent that the UK government is prioritising their needs ahead of Brexit, with just over 1 in 5 (21%) agreeing.  Exactly 2 in 5 (40%) businesses think the UK’s Brexit objectives should remain unchanged from before the 2017 General Election (i.e. leave the Single Market & Customs Union and seek a Comprehensive Free Trade Agreement/Customs Agreement), with over half (53%) selecting The UK’s Brexit objectives should now be revisited following the outcome of the General Election.

June 2017: British Chambers of Commerce Snap Poll on Brexit, West Midlands Responses – 247 respondents

 

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Phone 024 7665 4321
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