• Gibran Hamrouni

Brexit and the West Midlands

Birmingham is the second biggest city in England and the most populous city in the West Midlands with a population of 1 137 100 inhabitants [8]. On 23 June 2016, with a margin of 3,800 votes, 50.4% of Birmingham’s voters backed Brexit [2-3]. Birmingham has a very diverse population with only 77.8% of the city’s inhabitants being born in the UK [8]. Many British citizens fear the negative externalities that migrants may have as described by A. Clemens (2011) [9].



Birmingham Council House, Flickr


The West Midlands financial services’ industry is growing by around 23% giving it the possibility to become the third fastest growing financial service industry in the UK [4-6]. With HSBC moving their headquarters from London to Birmingham, Birmingham has a comparative advantage in financial services compared to other regions in the UK such as the North-East or in the EU. By leaving the EU, Birmingham could fully develop their financial service sector. However, Birmingham’s economy relies on finance as well as trade, medical industry and research [6]. As the Single market has enabled the automotive industry to create highly efficient cross-border supply chains [11], the major industrial investments in Birmingham have been in automotive components manufacturing and distribution, machinery and the metal industries. As seen on Graph 1, over 40% of the West Midlands exports are to the EU.


Graph 1: Percentage of Exports to the EU in England by Region [1]

Birmingham is an example of the rise of foreign manufacturers investing in the UK after the decline of the indigenous auto sector. The Resurrection of the British car industry is owed to access to EU market. Factories, like the Nissan plant in Sunderland, one of the largest in the UK, have thrived because of the supply chain of components and finished cars that zip back and forth over the EU borders. UK manufacturers –cars, chemicals, pharmaceuticals – business model are reliant on the just-in-time production facilitated by the single market.

Monique Ebell of the National Institute of Economic and Social Research (NIESR) estimates that leaving the single market will cause British exports to the EU to drop by 59 per cent. This percentage could only be ameliorated by the UK signing a bilateral trade agreement with the EU. While Brexit could develop Birmingham’s financial sector which would be greatly beneficial for the city and the UK [10], Birmingham is currently a major exporter to the EU and will be greatly affected by Brexit [7].


To conclude, the city of Birmingham [6] heavily relies on the globalization they rejected. On the short-term, the economy will get worse temporarily. Birmingham’s economy depends on the ability of HM Government to achieve a Brexit Deal with the EU. On the long-term, the economy will improve as Birmingham currently leads in growth in the UK, with an estimated £14 billion of additional Growth Value Added by 2025.

Sources:

1. The Guardian, (©2018) Parts of UK that voted for brexit may be hardest hit, study finds. [online] Guardian News and Media. Available from: https://www.theguardian.com/politics/2017/mar/27/parts-of-uk-that-voted-for-brexit-may-be-hardest-hit-study-finds

2. BBC, (©2018) EU Referendum Results [online] BBC. Available from: https://www.bbc.co.uk/news/politics/eu_referendum/results

3. BBC, (©2018) EU Referendum: Birmingham votes Brexit by a whisker [online] BBC Available from: https://www.bbc.co.uk/news/uk-politics-eu-referendum-36616108

4. PwC, (©2015) West Midlands named as key financial services hub [online] PwC. Available from: https://www.pwc.co.uk/who-we-are/regional-sites/midlands/press-releases/West-Midlands-named-as-key-financial-services-hub.html

5. City-Data, (©2018) Birmingham: Economy [online] Advameg. Available from: http://www.city-data.com/us-cities/The-South/Birmingham-Economy.html

6. Great Birmingham Chambers of Commerce (2018) Birmingham Economic Review 2018 [online] Birmingham: Great Birmingham Chambers of Commerce Available from: https://www.greaterbirminghamchambers.com/media/621745/ber-2018-summary.pdf

7. Birmingham Mail (©2018) Brexit will hit Birmingham car industry, social care and economy warns city council report [online] BirminghamLive. Available from: https://www.birminghammail.co.uk/news/midlands-news/lowdown-brexit-impact-birmingham-car-15453381

8. Birmingham City Council (2013) 2011 Census: Birmingham Population and Migration Topic Report [Online] Birmingham: Birmingham City Council. Available from: https://www.birmingham.gov.uk/downloads/file/9742/2011_birmingham_population_and_migration_topic_report

9. A. Clemens (2011) Economics and Emigration: Trillion-Dollar Bills on the Sidewalk? Nashville, TN, US: American Economic Association – Journal of Economic Perspectives – Volume 25, Number 3 – Summer 2011 – Pages 83-106

10. Forbes, (2016) The Economic Case For A Brexit [online] Forbes. Available from: https://www.forbes.com/sites/realspin/2016/06/22/brexit-economic-case/

11. Financial Times, (©2018) Long road ahead to completion of EU single market [online] The Financial Times Ltd. Available from: https://www.ft.com/content/64bf972c-a2b4-11e7-8d56-98a09be71849


At the time of writing, Gibran Hamrouni Cases is a First Year student at the University of Bristol. He is studying Economics. Areas that interest the most are International Economics and Security.

The student project covering international relations and foreign affairs

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