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Brexit makes case for Northern Powerhouse 'even stronger'

In the space of just 25 days since the Referendum, we have seen contenders for the Tory leadership come and go, Theresa May crowned Prime Minister without a contest and top Brexiteers either rewarded with Cabinet positions or discarded from Government.

Quantifying the economic impact from the Referendum result will take time but, for firms in Yorkshire, the North West and the North East, the short term question is what happens to the Northern Powerhouse agenda.

George Osborne, a key proponent of the Northern Powerhouse agenda, has now left the Treasury while James Wharton, previously Northern Powerhouse Minister under David Cameron, has been moved to the Department for International Development to be replaced by Brigg and Goole MP Andrew Percy.

So is the Northern Powerhouse agenda dead?

Not a chance.  If anything, in a post-referendum world, the case for a more inclusive economic policy that doesn’t just end at the M25 is even stronger today than it was before June 23rd.

Prime Minister May’s comments last week around a plan “to help not one or even two of our great regional cities but every single one of them” bodes well for the entire region given that there had been rumblings of discontent around how the Northern Powerhouse agenda may have appeared to prioritise a smaller number.

On top of this, while long term economic uncertainty comes with a price tag in terms of delayed investment plans and hiring decisions, short term uncertainty can actually be a positive.

This is particularly the case for SMEs who are more nimble and fleet of foot than their larger competitors.  As they proved in the immediate aftermath of the 07/08 global financial crisis, these firms are more than capable of outmanoeuvring more cumbersome, large corporates when it comes to adjusting their strategies and cost bases and shifting their investment decisions.

Similarly, while those firms who are focused heavily on domestic customers such as housebuilders may see a near term impact on trading, the region’s strong services, engineering and industrial heritage should see its exporters benefit from Sterling’s recent weakness while our burgeoning healthcare and technology sectors should continue to benefit from resilient earnings and strong product pipelines.

With East Yorkshire MP David Davis now appointed Secretary of State for Brexit, the North also has a clear and compelling voice at the table when it comes to negotiating the exit plan.

Like the shifting sands of the political landscape, the Northern Powerhouse agenda is likely to change shape over the coming weeks and months.  However, regardless of any short term uncertainty, it still definitely has a future when it comes to shaping economic policy.

 

This article was first posted on thebusinessdesk.com on 19.07.16.