'˜No deal' Brexit could see Sunderland firms suffer '˜death by a thousand cuts' fears business leader

In recent months, senior business and industry figures have warned of the impact on the North East if the UK leaves the European Union (EU) without a deal.

Sunderland City Council’s Economic Prosperity Scrutiny Committee this week received a presentation from the the North East Chamber of Commerce (COC)

Assistant director of policy, Jonathan Walker, said while Sunderland’s economy boasts strong advanced manufacturing, engineering and digital sectors, they’re also “exposed to risk” from a divorce with the EU.

And the result of a no deal or disruptive Brexit, he argued, could affect future investment, disrupt supply chains and even see some businesses relocate.

It comes after an Echo poll last week showed that 70 per cents of respondents still supported leaving the EU even if no deal can be brokered.

“We believe a ‘no deal’ Brexit is absolutely an unacceptable outcome and Sunderland provides the best example of that,” Mr Walker told councillors at Sunderland Civic Centre.

“When we have surveyed businesses in the region, among exporting businesses, the overwhelming majority want an outcome that keeps us in the single market or customs union or both.

“This is for the very simple reason that goods flow freely across borders into Sunderland.

“Any disruption to that trade fall we believe really exposes us to short-term disruption and risk but in the long-term makes Sunderland and the North East a less attractive place to invest in.

“We have a lot of companies based here where this is their European presence and they’re there to serve a European market.

“The reason we’re concerned is because the manufacturing sector in Sunderland is part of the jewel in the crown of the North East, we’re a region that continues to punch above its weight when it comes to export, particularly value.

“Of the total figures of the North East, roughly one third of our exports are related to the automotive sector, or transport equipment, by and large Nissan and some others.

“Sunderland is also a huge part of the growing sectors in the North East such as software and digital, a sector that goes under the radar because it’s mostly small businesses.”

He added: “A no deal scenario means we leave the EU and anybody who tries to talk about a managed ‘no deal’ scenario, no such thing exists.

“There are certain measures that might be put in place but by in large, the outcomes are the same.

“Which is significant additional costs and tariffs on goods, massive resource and logistical headaches at ports, additional goods and checks.

“That has a knock-on effect on the perception of (The North East) as a competitive place to locate yourself.”

Nissan, which has a factory in Sunderland, employs thousands of people in the region.

Around 80 per cent of Nissan’s finished goods are destined for export, with a large majority going to the EU or via the EU, the meeting heard.

While the short-term impact includes disruption, the long-term impact on city businesses remains uncertain.

Coun Stephen O’Brien raised concerns about the potential impact on small businesses, the struggling retail sector and the potential for huge unemployment.

In response to a question on the potential for businesses packing up or relocating, COC boss, Jonathan Walker, added a ‘no deal’ could force their hand.

“There are a number of companies in manufacturing both in Sunderland and elsewhere who are already looking at what their options would be to relocate,” he said.

“It depends on the ownership model, foreign-owned companies can shift production within their business.

“There would not be an immediate impact, in many cases it would be a risk of death by a thousand cuts, but obviously we wouldn’t notice the decline.

“Taking Nissan for example, they have to bid for bits of work that could go anywhere in the group, they might not get the next one and they’re down two production lines, then might not get the next one and it’s down to one production line.

“It’s 10 or 15 years before we notice the true impact.”

The North East COC represents more than 3,000 businesses in Tyne and Wear, Northumberland, Durham and the Tees Valley.

Its membership ranges from small business to major employer Nissan with its member organisations employing around 30 per cent of the region’s workforce.

As part of the discussion, the business leader also welcomed ideas by councillors to boost Sunderland’s economy, including building international links with China.

Other suggestions included providing a better hotel offer, the need for a regional identity for the North East, promoting apprenticeships and providing more major events like the Tall Ships.

According to the COC boss, infrastructure improvements and a Metro extension to Washington could also play their part in increasing footfall in the city.

Chris Binding , Local Democracy Reporting Service