Why Brexit is a double blow to the regions that voted to leave the EU


By Olivier Sykes & Philip O’Brien
Impact studies have revealed how different parts of the UK will suffer from Brexit more than others. One irony, as many have pointed out, is that a lot of these regions voted for Brexit. Another irony, which is less talked about, is that these are also regions that benefit a great deal from EU regional policy.

The UK is an unevenly developed state. Some territories (such as London) are much more well off than others (such as the northeast of England) as a result of decades of investment (or under-investment) in their economies. Others benefit from varying levels of devolution, which gives them a relatively greater autonomy to tailor policy to their own needs, and stronger political representation within Britain and the EU.

Over recent decades, when the UK government has fallen short in terms of regional policy to address the needs of less economically favoured regions, the EU has provided much-needed support. So the key question now is what will happen to the regions which have relied on this in the event of any Brexit? So far this remains unanswered.

A further irony here is the fact that the UK was instrumental in the foundation of a European regional policy, working alongside Ireland and Italy to place the idea firmly on the agenda. This was one of the many influences the UK exerted over the direction of the EEC and its successor, the EU. And it is a contribution that is well recognised and appreciated across Europe.

The creation of such a policy at European level in the mid-1970s was timely for the UK’s economically depressed areas. It was soon to coincide with a Conservative government led by Margaret Thatcher that was inclined to let regions fend for themselves.

But the EEC and forceful UK politicians like Michael Heseltine still believed the state and targeted public investment had a role to play in giving places that were suffering economic, social and environmental challenges a fighting chance to regenerate themselves. European regional policy emphasised the importance of “territorial cohesion”. This is the idea that all regions and their people should have a chance to grow and enjoy a good quality of life. Nobody and no place should be left behind.

Putting this idea into practice had significant and, in some places, transformational effects in the UK. The case of Liverpool and Merseyside is undoubtedly one of the most striking examples of the EU’s regional policy fostering regeneration. During the most difficult period of the area’s recent history in the 1980s, there had even been talk within the UK government of “managed decline” for the area – the very antithesis of regional policy.

This idea was ultimately rejected and initiatives such as the Merseyside Development Corporation started the process of regeneration. But, despite these, at the start of the 1990s Merseyside was still one of the poorest areas in Europe and became eligible for the highest level of EU regional policy support. Throughout successive rounds in the 1990s and into the 2000s this whole new level of support produced a step change in the fortunes of the area.

The physical, social, economic and environmental regeneration of the area culminated in Liverpool’s highly successful year as European Capital of Culture, 2008. It therefore came as little surprise that the city voted strongly to remain in the EU in the 2016 referendum. Yet other areas, which had received similar levels of substantial EU regional funding (such as the South Wales valleys) proved more susceptible to the claims of the Leave campaign and voted to leave the EU.

Whither the regions
Support from the EU gave greater autonomy to cities and regions, which could negotiate between the UK government and EU Commission to achieve the best support possible. By contrast, the Brexit state that appears to be emerging is by definition “nationalist” in its imagination and scope. Not just in a political sense but in that it privileges an overwhelming focus on how the UK is doing overall, at the aggregate national level, caring little for regional policy. Brexit must be seen to succeed at this national level for its advocates.

Take the UK government’s recent Industrial Strategy. It focuses on picking certain winning sectors that can be fostered to become world class, rather than developing the country across the board. As a result, it may reward some places – those deemed appropriate for investment – and leave others in the shadows.

This may well do little to resolve the regional imbalances that are often held to be responsible for the Brexit referendum outcome in 2016. It could even make things worse by diverting away scarce resources. And neglected regions will no longer have the EU as a recourse to turn to for funding and support. The new approach risks neglecting the fact that the UK is diverse and the impacts of Brexit are likely to be felt disproportionately in different places.

The EU has played an important role in supporting reinvestment in areas needing regeneration – either directly through EU regional funding, or indirectly (through the single market) by offering an attractive context for big foreign investments in sectors like the car industry.

The question now is, what kinds of mechanisms might replace the EU support structures which have served places like Merseyside so well?

There is, as yet, precious little clarity on the shape of any replacement regional policy. Meanwhile, it seems clearer than ever – on the basis of economic fundamentals (notably recent forecasts) and the continuing opportunities that could be offered to UK regions by forthcoming EU regional policy – that the interests of the whole UK, especially the economically weaker areas, would be best served by remaining a full member of the EU. – The Conversation


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