Paul Frainer 21 January 2021

A ‘bottom up’ response to Brexit

A ‘bottom up’ response to Brexit image

Many issues we will need to grapple with in relation to Brexit will be from a local, or ‘bottom up’, level – and, as a starting point economically, you simply cannot decouple the short to medium term effects of COVID from what could be a final nail in the coffin for some businesses, and even sub-sectors now we have left the EU.

This will only manifest overtly as we progress through 2021 and beyond, but of course many sectors and industries were not in an economically healthy position even prior to this and both Brexit and COVID combined could well be catastrophic. Having said that, there will most certainly be new niche markets and sectors which arise through this, and we must be doing everything we can at a hyperlocal and granular level to allow and facilitate these to flourish.

In Greater Cambridge we are looking at it from two levels: Cambridge is thought of rightly as a vibrant, knowledge-based economy, with global tech, life science and manufacturing sectors providing net contribution. It is a very high output area, but I am equally worried about the sectors that do not get the headlines, and the many SMEs who form the backbone of supply chains and provide the critical goods and services which will be crucial to facilitating an inclusive and sustainable economic recovery.

Macro scale businesses often have greater resilience, and they will have the ability to make more long-term choices, but on a more granular level we will certainly see huge pressures and are now working incredibly hard to identify businesses and industries that are falling between the cracks and not able to survive on government grants and loans. The self-employed labour market is another that needs significant focus, especially in areas crucial to recovery such as the cultural sector, and without these industries you lose the vibrancy within any economy.

I feel that there may be some small bouncebacks in terms of false dawns, but Brexit will have a long tail, similar to COVID, and I do not think we will learn the real effects of this until further down the line when we start to see some of those supply chain fractures and disconnects with labour market skills really come to the fore. We cannot really discount how this has, and will continue to affect people on a human level too, and wellbeing, especially mental health, should be a real concern as it will have a fundamental effect on so many areas of recovery.

There have been some massive shifts accelerated by COVID, and they may well improve outcomes that Brexit would have perhaps impacted more: for example, resilience in remote working and a new renewed focus on digital infrastructure connectivity has been elevated, and there is a sense that some industries have improved productivity as a result. Obviously we are too early in these shifts to really understand the trends but they should not go unnoticed. Also some things have slipped under the radar because we are so focused on the here and now.

We certainly need to keep a close eye on these and other emerging trends and what these may mean for local economies, labour markets in big cities and town centres, and investment in those areas. There has been a phenomenal shift in terms of movement as a result of lockdowns, and this has far-reaching effects in the short term but potentially profound effects if the trend sticks. Logistics and movement of goods, although behind the curve in terms of labour market, will follow, and with areas such as advanced manufacturing which will really accelerate through the latter part of the 2020s and early 2030s it may ultimately mean a real opportunity to rethink and reframe these challenges.

On the flip side there are likely to be some massive opportunities arising. Through some of the accelerated trends we have seen during COVID, we have been given a virtual crystal ball to look 10 years into the future. This is an opportunity to shape how we want the economy to change, especially in respect of the environmental and social challenges we face. Green technologies including energy have a crucial role to play, and from both a central and local government perspective the commitments around climate change are a powerful lever to shape markets that facilitate this positive change, not to mention the subsidiary industries. This could stimulate a more sustainable economy and drive innovation in this country.

Overall, I think we are at a crossroads economically, socially and environmentally, and Brexit is just one part of that complex system. Whilst some sectors will be absolutely fine in themselves, they also rely on many other parts of a complicated system of supply chains and beyond. Every part of the economy from public to private will need to adapt and I suspect we will see much harder times before we can actually start talking recovery in its truest sense.

However, if we can distil even a small amount of the positive behaviour change we have seen in the last year, and use that as a model for how we want the economy to look in five to 10 years’ time, there is some quite compelling optimism there irrespective of Brexit and COVID. What we have done is accelerate ourselves forward 10 years – and the worst thing we could do is try to retrofit the previous world on to how we recover.

Paul Frainer is assistant director for strategy and economy at Greater Cambridge Shared Planning Service, and a director of the Institute of Economic Development

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