Why getting the right Brexit deal is crucial for Sheffield's future

A hard Brexit could jeopardise Sheffield's burgeoning status as a haven for advanced manufacturing and the creative industries '“ while the decision to leave the European Union is already harming recruitment for jobs in the city.

Wednesday, 25th July 2018, 12:38 pm
Updated Thursday, 26th July 2018, 4:47 pm
The Union Flag above Sheffield railway station the UK is to leave the European Union next March but the two sides future relationship is undetermined. Picture: Scott Merrylees

That is the stark assessment of the Sheffield Central MP Paul Blomfield – a shadow minister in Labour’s Brexit team – and experts following a month of drama over the Government’s approach to negotiations. This week the Prime Minister, Theresa May, announced she would be taking personal control of talks with Brussels, with secretary of state Dominic Raab deputising for her.

A white paper was also published setting out how the Government will implement the withdrawal deal it reaches with the EU. The UK leaves the union on March 29, 2019, but there is still no agreement on the two sides’ future relationship. No-deal planning is to be stepped up, on Mrs May’s instruction.

“There will be key sectors on which the Sheffield economy depends which are at risk from Brexit, but much more at risk if the Government can’t secure a deal which retains a close relationship with the European Union,” said Mr Blomfield.

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Advanced manufacturing, the creative and digital industries, and higher education – areas commonly viewed as crucial to Sheffield’s continued prosperity in the years to come – were the three sectors facing the most damage locally, he said.

The Government’s own analysis was that the national economy would take an eight per cent hit over 15 years if the UK left the EU without a deal, Mr Blomfield pointed out. The London School of Economics has predicted Sheffield’s GVA – a measure of productivity that stood at £11.3bn at the end of 2016 – would contract by more than two per cent in the event of a hard Brexit where, in the most extreme scenario, the UK finds itself outside the customs union and single market, and must rely on World Trade Organisation rules to do business with Europe.

“It will be worse in those areas that are more heavily dependent on manufacturing,” he said. This would encompass engineering, steel and the focus on advanced skills that has brought companies such as McLaren and Boeing to the region. “Getting the deal right is crucial in that area. It’s partly about tariffs, and partly about regulatory alignment.”

Mr Blomfield said he had met leaders of the Sheffield Digital group who were encountering ‘problems with access to talent’.

“They are very heavily dependent on niche skills not available within the UK.”

He added: “We’re very much a university city these days. That’s an incredible dynamo for economic growth. It’s dependent on the free flow of talent – academics, researchers – and traditionally on EU income.”

Both of Sheffield’s universities were experiencing a slump in job applications from European candidates, he said. “I’ve been talking to people who have been saying applications from EU citizens for jobs are down. There is huge uncertainty.”

He said some individuals ‘don’t feel as comfortable here, or as welcome as they used to’.

Dr Clara Sandelind, from Sheffield University’s politics department, has been researching attitudes towards immigration – one of the Vote Leave campaign’s driving factors in 2016. The academic, who came to Britain from Sweden a decade ago, said leaving the EU was unlikely to address fears about levels of migration to the UK.

“If people are worried about wages or employment they’ll find even if the UK were to drastically limit EU migration those issues wouldn’t disappear – because they have nothing to do with immigration.”

Dr Sandelind said a ‘proper discussion’ was needed about why others were perceived as ‘different and a threat to national identity’.

British citizens would be ‘uneasy’ with the true implications of stricter immigration, she added.

“There have already been cases where people have tried to apply for a permanent residency and they’ve been told by the Home Office to leave the country even though they’ve lived here for decades, been married to a British citizen, have British children and have worked here all their life.”

Simon Duffy, director of the Centre for Welfare Reform, a think tank based in Nether Edge, said the impact of Brexit would be ‘political and economic’. Despite being a remainer, he argued leaving would put constitutional reform, including higher investment in the North, back on the agenda – and also questioned the reliance of the NHS on overseas staff.

“Politicians are smart enough to realise Brexit was a bit of a rebellion – people saying ‘We’ve had 40 years of industrial decline, you’ve done nothing about that’.”

Claims the NHS – which employs thousands in Sheffield – would fail after the UK leaves the EU were ‘a bit overblown’, he said.

“The way this conversation happens in the media is: ‘The NHS is under threat because it can’t bring in doctors from overseas’. But why is it bringing in doctors when those countries have weaker healthcare systems? I don’t think there’s anything morally superior about importing other people’s experts from places that need them.”

Ultimately, in a city where the referendum vote was almost split 50/50, Brexit was a ‘function of social injustice’, he said. “We have incredibly wealthy and poor parts of Sheffield.”

Sheffield ‘needs as soft a Brexit as possible’

Sheffield would benefit most from ‘as soft a Brexit as possible’, a city expert in global trade said.

Dr Jeremy Head, principal lecturer in international business at Sheffield Hallam University, led a study in March that found a hard Brexit – where the UK abruptly leaves the EU without a deal on a future relationship –could cause foreign investment to drop by up to 20 per cent over 15 years. If Britain stayed within the European Economic Area, the impact would be a five to 10 per cent decline, the paper found.

“My estimated impacts were slightly lower than for some other research, but still significantly negative in all scenarios, really,” he said.

Dr Head confirmed that advanced manufacturing – ‘any manufacturing that has integrated supply chains with Europe, or where free movement of labour is important’ – and the creative industries could suffer in Sheffield if the UK leaves and falls back on World Trade Organisation rules.

“An outcome within the single market is preferable, as soft a Brexit as possible. It’s easier to move goods, services and people around, which is what companies really want to do.”

The study found Brexit could help to rebalance the economy away from the South East. “It is possible, if the negative impacts are less bad,” said Dr Head. “But we’re still talking about negative impacts, aren’t we.”