Brexit: No-deal outcome to hurt every UK region with northeast England hit hardest, study predicts

Areas more heavily reliant on exports and manufacturing likely to be most severely damaged, Confederation of British Industry finds

No-deal Brexit will significantly hurt the economy of all UK regions with northeast England most severely damaged, new research has predicted.

The northeast’s economy could produce 10.5 per cent less in 2034 after no deal than if the UK remains in the EU, according to the Confederation of British Industry.

Its report analysed government figures to assess the impact on each part of the UK. In line with previous research, it found that areas more heavily reliant on exports and manufacturing are likely to be most severely damaged.

The northeast, which has a strong manufacturing sector including Nissan’s car plant in Sunderland, exports 55 per cent of its produce to the EU, meaning border delays and customs checks will hurt more.

While no region will be immune, proportionally London will take the smallest hit to to the amount of goods and services it produces annually, known as gross value added (GVA).

Its GVA is predicted to be 6 per cent lower in 2034 than it would otherwise have been, but because the capital’s economy is large, in cash terms this would amount to £40bn – more than any other region.

Scotland, which voted decisively to remain in the EU, is predicted to produce £14bn less in 2034 if the UK crashes out of the trading bloc with no deal in just 66 days’ time.

Wales will lose £7bn of economic output in 15 years time, Northern Ireland £5bn and the northwest of England £20bn.

Josh Hardie, the deputy director general of the CBI, said: “The projected impact on the UK economy would be devastating and, while business will do all it can to reduce some of the worst aspects, a no-deal scenario is unmanageable.”

Philip Hammond told business leaders last week that a no-deal Brexit could be “taken off the table” in a conference call where he raised the possibility of delaying Britain’s exit from the EU.

Hours after Theresa May suffered a historic Commons defeat over her Brexit deal, Mr Hammond sought to reassure bosses of top firms that a disorderly exit from the bloc would be avoided.