World Data Lab

Brexit: England’s north eastern regions – Wuthering Depths?

“Be with me always - take any form - drive me mad! only do not leave me in this abyss, where I cannot find you!” Emily Brontë, Wuthering Heights

With the new preliminary Brexit date set for April 12th, not only did the British gain some time to think about the consequences of leaving the European Union, but it allowed us at World Data Lab to continue our special series on different regions in the UK and how they are expected to perform in terms of spending power development until 2030—if economic conditions remain the same aka. without Brexit. Today, we take a look at England’s north eastern regions, home of 19th century author Emily Brontë.

In the Brexit referendum of June 23, 2016, England’s northeastern regions voted, like the East and the Midlands, 55% to 60% in favor of leaving the European Union. World Data Lab takes a look at the per capita economic conditions in these regions to see if this was the main driver for this vote.

In general, England’s North East is not doing relatively well. Both regions, which form England’s North East (North East, as well as Northumberland and York, on NUTS 1 level), fall short in comparison to the UK average in terms of annual per capita spending power. Currently, in 2019, the North East region (consisting of Tees Valley and Durham, Northumberland and Tyne and Wear, on NUTS 2 level) on average have $4,381 (in 2011 PPP) less to spend per year than the UK average. Even if we exclude London from the UK average, the difference still amounts to $3,799. Annual per capita spending power for the North East is $19,939 in 2019. For the UK, the average spending power with London is $24,321.

The region of Northumberland and York faces similar shortcomings. In 2019, a person in this region has on average $2,764 less to spend annually than the average British person ($2,182 without considering London). Taking the 15-year average annual growth rates (2016-2031), both regions considerably lack speed. The North East is expected to increase its average annual spending power by 0.55%, and Northumberland and York by 0.85%. The British average growth rate is 0.97% - almost double the rate of the North East. Hence by 2031, if economic conditions remain the same, people in the North East region will have an annual consumption power of $21,456 and in Northumberland and York, of $24,116, whereas in the UK (without London), it will be on average $27,655 per person per year.

Yorkshire

The NUTS 2 classification allows us to compare the main regions of Northumberland and York. The Yorkshire area is formed by three districts on the NUTS 2 level: North Yorkshire (with the city of York), South Yorkshire (with the two big cities of Sheffield and Bradford), and Western Yorkshire (with Leeds). York itself has around 140,000 people, Sheffield around 570,000, Bradford 295,000, and Leeds around 475,000 people. In the Brexit referendum, all these cities voted differently: Sheffield (49% for remain), Bradford (45.8% for remain), York (58% for remain), and Leeds (50.3% for remain).

From our data and calculations, we can see that North and West Yorkshire are on a same level in 2019, with an annual per capita spending power of $22,725 and $22,800 respectively. South Yorkshire with Sheffield and Bradford is somewhat behind with $18,853 consumption power per person – which puts it in the same league as South Western Scotland or Cornwall and the Isles of Scilly. However, over a 15-year average (2016-2031), South Yorkshire is expected to grow its per capita consumption power by 0.86%, outstripping West Yorkshire with 0.83% and North Yorkshire with 0.59%. By 2031, North Yorkshire will have an annual per capita spending power of $24,607, South Yorkshire of $21,121, and West Yorkshire of $25,457. Again, these regions will fall considerably short of the British average of $27,655 per person per year (without London).

Structural problems

The British government is taking these structural shortcomings of England’s northern regions into account and announced a special fund to help them improve over the medium-term. The £1.6 billion for the newly set up Stronger Towns Fund will provide £197 million for Yorkshire and the Humber and £105 million for the North East and will be spent over seven years from 2019 to 2026. Without taking any multiplier effects into account and calculating using the current exchange rate of $1.3 for £1, this translates to an additional $7 per person per year for Yorkshire and the Humber and an additional $8 per person per year for the North East region. This raises the important (and somewhat naïve) question: How much does a decent pint in a pub cost nowadays?