Plymouth people could be hundreds of pounds worse off next year thanks to Brexit
It's if a trade deal isn't struck with the EU, according to a report heard by city councillors
Brexit is predicted to leave Plymouth people hundreds of pounds worse off next year.
Without a trade deal with the EU, tariffs on imports would increase the cost of food, hitting the poorest hardest, city councillors heard.
A potential shortage of seasonal migrant workers would force farmers to increase pay, but would have a knock-on effect on produce prices.
The expected negative economic impact of Brexit on Plymouth was outlined in a report to a city council scrutiny committee.
Policy adviser Kevin Mckenzie said the Bank of England was predicting a short-term drop of 1per cent in economic output in the first three months of next year due to leaving the European Union, on top of the recession caused by the pandemic.
Most forecasts also predicted longer term damage to the economy, although it would be lessened by a free trade agreement with Europe.
Talks on a trade deal are currently ongoing between the UK and the EU, but time is running out for an agreement to replace the transitional arrangements from January.
Government analysis predicts a no-deal reduction in the UK economy of 7.6per cent by 2035, or 4.9per cent with a free trade agreement, although one group of economists is forecasting a gain of 4per cent.
Mr Mckenzie said even the most optimistic forecast put the loss to an average citizen of Plymouth at £356 a year:
"It wouldn’t be an even spread – some people would be more affected by it than others."
The worst impact would be on those on the lowest incomes, who spent relatively more on food.
The total loss to the city’s economy was forecast at around £400million by 2035, using Government figures.
Plymouth voted in favour of leaving the EU by six to four at the Referendum in 2016.
Councillors were told that taking back control of UK fishing rights could benefit the Plymouth industry by allowing a bigger catch, potentially doubling its current £20million value, but the 60per cent exported to the EU could be affected by tariffs.
The city has a relatively high level of migrant labour in sectors including construction, manufacturing, health and social care, and hospitality and tourism, with farmers relying on seasonal workers.
It looks unlikely new immigrations controls which replace free movement from January 1 will be relaxed for the relatively low-paid workers, which could cause a labour shortage for some industries, pushing up wages.
The number of EU nationals in Plymouth has been estimated at between 10,000 and 13,000. The number applying to stay on is expected to reach around 9,000 by the deadline of June 2021.
Councillors were told that businesses supported by foreign direct investment employ around 7,900 people in the city, with 12 new projects last year worth around £94million, slightly lower than previous years.
Solicitor Sarah Holmes, a specialist in environmental and planning law, gave a presentation to the council’s Brexit scrutiny committee about the impact on businesses of leaving the EU, highlighting the major impact of changes to regulations and customs processes.
The Plymouth-based legal director of Womble Bond Dickinson said many uncertainties remained just weeks ahead of the close of the transition period at the end of December, including arrangements for the Northern Ireland border.
The solicitor gave the example of the construction industry which was facing extra costs and delays for imported materials, including most of its softwood timber which came from Europe.
She said the UK had been poorly educated and poorly prepared for the changes, including potential trade barriers. Key information had not been made available because of non-disclosure agreements insisted on by the Government, which meant organisations including businesses and ports could not discuss the issues relating to Brexit preparedness they were trying to resolve.
She said there had been "horrendously inaccurate information" and "poor understanding" among politicians and in the media.
The solicitor said:
"I think some newspaper readers are going to have a real shock when we get to the first of January, because what they’ve been told time and time again is simply not correct, factually."
Asked by committee chair Darren Winter what was the biggest concern for businesses, she said:
"They need a deal. We need a deal. It is a really big thing.
"Anybody out there on national television saying it doesn’t matter much, I’m afraid don’t know what they are talking about. It matters hugely to many, many British businesses and British citizens that we do have a deal with the European Union."