The Possible Impact of Brexit on Coventry - some thoughts
by John Payne, Coventry Society Committee Member
The views expressed in this paper are purely personal and do not reflect the views of the Coventry Society.
I haven’t read anything in the local press about the likely impact of Brexit on Coventry, so I thought that I would put some thoughts down on paper myself. I’m not an economist, so I can’t promise that this is properly thought through, so I would like to hear what you think might happen.
Austerity. It isn’t going to go away any time soon! So we can expect city council services to continue to be under pressure for many more years and it will probably get worse. The direction of travel is towards removing Government grant to local authorities all together, with funds raised from Council Tax and charges. The roads and parks may get a little worse and there will be less money to spend supporting people in need. We might also expect more things to be charged for. It will depend on the Budget of course, but I would expect schools to continue to receive the existing level of funding support as decisions on their money isn’t made by local government and education is a high priority for all political parties. There might be an impact on the school building programme though!
Investment! This is the big one! Although Jaguar have said that they don’t have any plans for change yet, it is unlikely that the company will go ahead with the big expansion at the Gateway project before the future relationship of the country and Europe are sorted out; so don’t expect any movement on this project in the near future. What about City Centre South? I would imagine that this won’t be as attractive to foreign investors as it was last week. It seems possible that the plans will be put on hold for a few years. The first stage of Friargate and the enhancement of the railway station is well underway and the second building has just received planning permission. It will be interesting to see if this goes ahead to schedule. Beyond this we might have to wait until things get better before the project is completed.
On what some might see as the positive side, it now seems entirely likely that HS2 will either be scrapped or at least delayed, so we should continue to have our frequent and fast services to London for a few more years.
Housing! On the basis of what has happened over the past week, it seems unlikely that the building industry will recover any time soon. Existing developments should continue unabated, but at the moment the country is not able to provide all the bricks and other building materials we need. It will become more expensive to buy building materials from abroad because of the Exchange Rate changes and access to loans will probably be harder to come by. If immigration really does reduce then there may be less pressure on housing. All this may mean that the Green Belt is safe for a few more years; so long as the Council can come up with a sound phasing policy on development that ensures that the brown field sites are developed first.
Economy and Recession. In the past the city has been very vulnerable to recession, but there has been a lot of diversification over recent years, so we might escape the worst impact of the coming recession. There probably will be a recession, or at least a downturn, as there will be less money in the economy, higher personal taxes, higher prices and therefore less to spend. The big question is how long it will last for? Let’s hope it won’t be for too long and that our businesses can ride it out.
Our Universities. Both our universities are strong players in both national and international markets. However they do have a significant number of EU students. Coventry University has 1500 EU students (approx. 7%) and Warwick has 1700 (approximately 9.5%). At the moment they are entitled to UK loans as a result of the EU non-discrimination requirements. These students have been promised that their loans will continue for the period of their courses, but it does not seem likely that the UK Government would finance EU students after the UK formally leaves the EU. Of course if the Exchange Rates remain low, then it should be possible to attract more students from places like China and India. At the moment foreign students are counted as immigrants so there might be an impact on the number of foreign students if a future Government decides to cap immigration numbers. In 2014/15 there were 437,000 foreign students in the UK; this is good for the economy so it is a bit silly to count them as immigrants, and there will be a strong case for re-classifying them in some way.
Both universities receive a great deal of money via EU research grants. 72% of research at Coventry University is funded by Europe and somewhere between 20 – 30% at Warwick University (but a larger cash figure). The Leave Campaign gave reassurances that there would be no reduction until 2020, but the future is to say the least uncertain, and we can expect some economising and re-direction within the University community. However overall I expect both universities to continue as major forces in our city.
Communities. Coventry has a good record of community cohesion, but until things settle down we might expect a growth in the number of hate incidents. There is also a growing issue of generational intolerance and blame. In previous times of tension in the city we have seen the Cathedral, Police, city and community leaders take active cohesion initiatives, and we might expect to see something along these lines in the near future.
In summarising all this, the main issue is uncertainty. Until we know what the future relationship with Europe is, it won’t be possible to predict the future and people will wait before investing. With or without Brexit, the city will change and the degree of change is mostly driven by economic prosperity or the lack of it. But we have been through recessions and depressions before and the city always rises to the challenge after a bit of a delay. We are not called the Phoenix city for nothing!
John Payne
28/6/2016