Impact & implications of ‘Brexit’ for Regions

By the CPMR Secretariat

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Triggering of Article 50

Tomorrow, nine months after the UK voted to leave the European Union (EU), the Prime Minister Theresa May will formally notify the European Council of the UK’s intention  to withdraw from the EU, in line with the requirements of Article 50 of the Treaty of the European Union.

Thus begins a two-year timeframe for negotiations, which should mean that by the end of March 2019 the UK will cease to be a part of the European Union, unless both sides (the UK on the one side, the other 27 EU Member States (EU27) on the other) agree unanimously to extend the negotiations beyond two years. The road ahead is uncertain as no State has left the EU before and the rules for exit included in the Treaty are brief.

On 29 April a Special Summit of the EU27 will be held on Article 50 where Guidelines for the negotiations will be formally agreed. The European Commission, which through Michel Barnier, will lead the negotiations, will then draw up detailed negotiating texts in the weeks following this Special Summit, and these texts will be agreed by EU affairs ministers in the Council (acting on qualified majority voting) in May or June. Once these texts have been agreed the formal negotiations will begin.

Following up the Brexit process: specific task forces in CPMR Geographical Commissions

The CPMR will closely follow the process as part of our work on the future of Europe in direct collaboration with the most affected CPMR geographical commissions: the Atlantic Arc Commission (AAC) and the North Sea Commission. Both of them have established new Brexit task forces/working groups.

The Brexit Task force of the Atlantic Arc Commission will be led by Galicia and will meet tomorrow in Brussels for the first time, and the working group of the North Sea Commission will be led by Groningen. Our focus will be on the potential impact of Brexit on the relationships, links and co-operation activities between regions, and the financial impact of losing the UK’s contribution to the EU on policies and priorities that matter to our member regions.

In tomorrow’s meeting, Galicia will present the main goals to be achieved by the AAC working group, including the overall objective of making Atlantic Arc Regions concerns on Brexit an issue on the agenda of the political sphere by preparing a joint declaration of our members.

Territorial impact of Brexit

It is clear from initial analysis (see for example Brittany, Cornwall, Flanders, Wales, Scotland, Ireland, Ireland and Brexit – North West Border Region, the CPMR’s Atlantic Arc Commission, and in parts of Northern Ireland) that Brexit will have a disproportionate impact on many regions. The implications of Brexit will be extensive, cutting across many areas:  regional trade of goods and services with the UK, which will be particularly acute within certain sectors and industries including of course the maritime economy and tourism broadly. More specific sectors will also be affected depending on the regions concerned; impact on housing markets, the health and social care or research and education.

Concrete examples can illustrate this implications:

Galicia, for instance, is the biggest fishing region in Europe. The withdrawal of the UK may create an unfair situation affecting its fleet if fisheries are not adequately taken into consideration during the negotiations. In this regard, it is crucial to ensure from the very beginning that the access to fishing grounds is linked to the access to the market.

– For Normandy the UK is the number one client for tourism and for ownership of second residences, and the 3rd largest market for its exports – which is also the case for Brittany.

– For Andalucía the UK accounts for 2 million tourist visits (25% of the total of foreign visitors per annum) and 10% of total tourism to this region.

– Ireland has 3 million UK tourist visitors per annum with an estimated economic value of over 800m euros. For the Basque Country, the UK is the fourth largest destination for exports, and the third largest for imports, with strong economic links within the steel, energy, aeronautics and car industries, and the story is similar for many other Spanish regions.

– And we are as equally concerned for our members in the UK. For example two thirds of exports from Wales, one of our member regions, currently go to the EU – therefore, any changes to the nature of the relationship between Wales and the EU could potentially hit the Welsh economy very hard.

It is important that the ‘territorial impact’ of Brexit is not lost in the negotiations between the EU27 and the UK Government. In our work on Brexit we will be looking to draw together the different analysis and reports on the regional impact of Brexit, posting links on this Web-Forum. We ask for your help in this: if you are aware of studies, reports or ongoing research into the territorial impact please let us know so that we can include references to this here.

Continuing co-operation at regional level post-Brexit

Another theme in our work on Brexit will be the framework for future co-operation between regions pot-Brexit. There is a clear commitment from CPMR to maintain strong links with the UK’s nations and regions post-Brexit, and continued support for co-operation, partnerships, and exchanges in the future. The UK doesn’t disappear as a result of Brexit; and the historic cultural, social, and economic links binding us together will continue, including an important joint responsibility for the maritime spaces that we share in the Channel, North Sea, Atlantic, and Irish Sea. The CPMR and our Geographical Commissions will be making these points forcibly during the next two years.

Implications of Brexit to current and future EU Budget

The departure of the UK potentially impacts on the EU Budget in two ways. The first concerns the current Multi-annual Financial Framework for the period 2014-2020, and the commitments that the UK has already signed up to. If the UK walks away from the negotiations without delivering on its agreed commitments that will create a hole within the MFF and could place in jeopardy the completion of Operational Programmes and projects supported within the current round of EU programmes. Clearly this is a scenario that the CPMR will be hoping is avoided, and will be backing calls for fairness in the negotiations: that the UK delivers on agreed commitments and that the negotiations don’t undermine this.

The second concerns the future EU Budgets and financial frameworks for the post-Brexit period, and the implications of losing the UKs net contribution (estimated at around 10bn euros annually). This loss will be significant and will mean re-thinking how the EU27 finances EU policies in the future, including questions over the role of ‘new own resources’. The CPMR has made clear its support and commitment to maintaining a strong EU-wide Cohesion Policy that involves all regions, and will be adopting a formal policy position on the future of the policy in June this year. Europe has seen growing inequalities and disparities since the financial and economic crisis, making the Cohesion Policy more essential than ever as the EU’s investment policy, as a complement and balancing mechanism to address the market failures associated with the Single Market.

Regional voice in the negotiations

As CPMR President Cordeiro stated in the CPMR’s Political Bureau in Gozo on 10 March “It is crucial that regions are active in the debate on the Future of Europe”. Brexit is one of the biggest developments in recent EU history and CPMR has an important role to play in highlighting the differential territorial impact that Brexit will have.

We encourage member regions to participate on this section by sending their contributions on the impact of Brexit on their regions or any other relevant information related to the negotiation process. We are keen to hear from you.

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