BRIGHTON is expected to see a significant slowdown in economic growth following the UK’s decision to leave the EU, according to new research.
The city economy is expected to grow by 0.6 per cent in the 12 months to Q1 2017 – significantly down on the 2.1 per cent growth rate which was predicted for the same period if the UK had not decided to leave the EU.
The analysis by national law firm Irwin Mitchell and the Centre for Economic and Business Research (CEBR) found Brighton’s economy will improve in the 12 months to Q1 2018 to 1.3 per cent growth – but still below the growth predicted before the outcome of the referendum was known.
Irwin Mitchell’s UK Powerhouse study provides an estimate of GVA (gross value added) and job creation within 38 of the UK’s largest cities 12 months ahead of the government’s official figures.
London’s economy is due to be hit hardest in the short-term, with the CEBR revising its predictions for growth in GVA across the capital from 2.4 per cent to 0.4 per cent in the 12 months to Q1 2017 following the referendum vote.
Sam Alderson, economist at the CEBR, said: “There are a number of factors that make Brighton vulnerable to a slowdown. Firstly, consumer and business confidence has dropped sharply in the weeks following the referendum which will negatively impact on two key drivers of growth for the city – rising household consumption and inward investment from businesses.
“Additionally, the city’s ties to the capital, where economic uncertainty is going to have a notable impact on the economy, will act to put further pressure on activity in Brighton.
“Brighton’s strength in creative, digital and new media should provide some support to economic growth during the period. However, even within these sectors a cooling in growth is expected to follow from reduced business expenditure across the rest of the economy.
“Given the macroeconomic nature of the slowdown, It is difficult to see too many ways that Brighton can help to mitigate the slowdown. But there are opportunities. For instance, the fall in the value of sterling creates opportunities for businesses in Brighton to both find new areas of growth in export markets overseas and try to take advantage of the higher cost of overseas holidays to the domestic consumer.”
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Niall Baker, CEO of Irwin Mitchell’s Business Legal Services team, added: “These forecasts demonstrate the significant challenges that many businesses face in the UK.
“All of the cities in the study are expected to see growth rates slow significantly and although there are signs of recovery as we move through 2017 into 2018, output is still anticipated to be lower than it would be if the referendum vote had gone the other way.
Niall Baker added: “Dealing with this current economic uncertainty presents a tough challenge for many businesses and following Brexit, there could well be further instability.
“Although it’s going to take some time to understand the full impact of the referendum result, many organisations are already considering a wide range of legal issues in order to ensure they’re as prepared as they can be for a future when the UK is no longer in the EU.”
Following the decision to leave the EU, Irwin Mitchell has developed a legal checklist that businesses should consider ahead of the date when the UK formally leaves the EU.