Scott Lavery and Owen Parker, co-leaders of SPERI’s European Capitalism and the Future of the European Union research programme, have responded to today’s EU referendum result.
The value of Sterling has already fallen to a 30 year low. In this situation, there is a danger of further capital flight, as investors withdraw their money from the UK economy in the face of economic uncertainty. This means that over the coming weeks and months the Bank of England may come under pressure to instigate an interest rates rise to protect the value of Sterling. In the context of an already fragile economic recovery, this could potentially pitch the UK economy back into a recession and put a further strain on already highly indebted British households. This, in combination with possible further rounds of public spending cuts from the Conservative government to stabilise the value of the pound, could have a devastating impact on the poorer UK’s regions.
In addition, and as outlined in SPERI research prior to the referendum, poorer regions receive far more in structural funds from the EU than richer regions in the UK. Wales and Cornwall, for example, are net recipients of structural funds which have helped fund jobs growth, investment and business activity in these areas. Regions in the North of England have also been more reliant on the EU for export markets in goods than the national average. The Leave vote puts both of these links between poorer regions and the EU into jeopardy, with potentially very damaging consequences.
You can also read comments on the EU referendum results from SPERI Associate Fellows Jason Heyes (Professor of Employment Relations) Tim Vorley (Professor of Entrepreneurship) and James Wilsdon (Professor of Research Policy), and from other academics from the University of Sheffield, here.