This is the second of a series of policy briefings (view the first one here) linked to the Socio-Economic Impact Model for the UK (SEIM-UK) project. In this policy briefing, we describe the trade relationships between the West Midlands Economy (WME) and the rest of the UK and the EU.
In the last decades, WME has become more dependent on other economies due to the processes of the geographical fragmentation of production. Our UK interregional trade data allows in-depth analysis of direct and indirect manufacturing, as well as services trade flows relationships between WME and the rest of the world. In this policy briefing, we focus on the direct effects.
The West Midlands economy is directly linked with the EU economy in terms of its value chains. Our analysis shows that WME has a very high direct import dependency on trade with the EU while a low direct export dependency on trade with the EU, in comparison with other UK regions and the UK average. This has important implications for the WME which are linked to the final outcome of the Brexit negotiations. Leaving the Single Market will imply higher costs of imports that will be translated into higher prices of products produced in West Midlands, leading therefore to a potential competitiveness loss (Thissen et al., 2019).
Our analysis illustrates the complexity and variety of the types of regional trade flows to and from the WME and the rest of the UK. Inner London, Berkshire Bucks and Oxfordshire and East Wales are the major providers while Welsh regions are the major receivers of products and services from WME. It is important to consider that services products also have an important role in explaining trade linkages of WME and the rest of the UK.
This policy briefing was written by Dr Andre Carrascal-Incera, Research Fellow, City-REDI, Raquel Ortega-Argiles, Professor of Regional Economic Development, City-REDI and Geoffrey Hewings, Emeritus Director of the Regional Economics Applications Laboratory (REAL), and Professor Emeritus, University of Illinois.
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