Almost one year on from the EU referendum, it still seems astonishing that the bottom-line costs of Brexit remain obscured – though Michael Barnes’ talk at the Future Business Centre Cambridge did much to make the financial dynamics of leaving the EU clearer.
Barnes is Head of EU Programmes at the Greater Cambridgeshire/Greater Peterborough Enterprise Partnership, with a 26-year career in central government, including significant experience in managing EU funds at the European Regional Development Fund (ERDF) and the European Social Fund (ESF) during his time as senior manager at the Government Office for the East of England.
The local enterprise partnership – the LEP – covers an area with a population of 1.3m people, involving 70,000 jobs, 60,000 enterprises and a turnover of £30bn annually. The powerhouse boasts a number of globally significant business clusters, world class university/research facilities and national leaders in agriculture, food and drink.
The event at the Allia Future Business Centre (FBC) last week was entitled ‘Brexit and Beyond – what does it mean for the business and start-up community?’ and was introduced by Martin Clark, director of Impact Innovation & deputy CEO at Allia.
Barnes, pictured at Allia FBC, made it clear at the start that “I’m talking as me – the LEP doesn’t have any established views one way or another,” adding that this clarification includes not just Brexit but also the current two-elections-within-a-month political drama.
Even the Department for Exiting the European Union (DExEU) recently tweeted the significant increase in trade the UK has enjoyed since joining the European Union in 1973. Okay, it was accidental but it certainly rang true when Barnes said that “it’s fair to say there’s a dearth of information around” on how Brexit will benefit the economy. He then set about putting that right with a storming Powerpoint display – surely an oxymoron until this event – which listed all too clearly not just how much trade the UK does with the EU, but the benefit from the grants and connectivity that comes our way as a result of membership. “Businesses, universities and research organisations are all used to receiving European funding and are asking ‘if we’re not going to receive that support what are the replacements?’
Replacement funding is the plan but the cheques haven’t been signed yet, which creates uncertainty, and uncertainty is a Bad Thing “because businesses like to invest and if you don’t know what’s going to happen that makes it difficult”.
There are “transitional arrangements and this is fine, but the implication of transition is that you know what the future looks like and the problem at the moment is that we don’t know what the future looks like, though we do know we don’t want the ‘cliff edge’ as it were”. Freedom of movement is the first item on the agenda. After that there’s the funding – “thousands of deals to be unravelled, like spaghetti, so it’s going to be a gradual unravelling – in practice it’s going to go on for a long long time”.
Leaving the customs union will be thorny – and it’s entirely possible the electorate still isn’t aware just how thorny. Trade deals take years to put together – “the EU agreement with Canada took nine years and it hasn’t been ratified yet”.
Local funding under threat includes:
- The ERDF, which includes incoming cash for “research and innovation projects, information & communications technology and broadband, SME competitiveness and the low-carbon economy”.
- The ESF.
- The European Agricultural Fund for Rural Development (EAFRD).
The impact in Cambridgeshire will be felt most keenly in the research and agricultural sectors and the mechanism for replacement funding, though fine in principle, has no guaranteed timeline. There’s also the fact that EU funding has “a snowballing effect” which accelerates growth, and progress may slow temporarily in sectors if Europe’s best personnel aren’t included.
“The immediate post-Brexit message from the Government is ‘business as usual’ – don’t believe it,” Barnes said. “For how long will the Government guarantee funding? We don’t know. I personally don’t believe they can write an open-ended blank cheque so that’s a really serious question.
“We’ve got to reduce the impact on the knowledge economy. We’ve got also to retain confidence in construction and housing. There’s the question of do we have the right skills for our businesses and the question of housing, so we need to invest in areas we are strong and upgrade infrastructure.”
The Q&A session, chaired by Cambridge News’ business correspondent Matt Gooding, revealed that Horizon2020 is the key EU research and innovation programme affecting funding for the University of Cambridge. Who will Horizon2020’s successor be, “if there is a successor”?
The evening was hugely informative and Barnes’ presentation left little doubt that the full financial costs of leaving the EU are not yet being felt – though surely this wouldn’t have influenced the timing of this summer’s General Election!?
We don’t know what will happen but, as Barnes said in a memorable image, if we continue with Brexit we’ll become aware that leaving the EU is that “a bit like being on a big cruise liner and suddenly you’re bobbing around in one of the lifeboats”.
An interesting event for interesting times.