How Yorkshire has remained strong despite post-Brexit fears

On Thursday 23rd June 2016, the United Kingdom was left shaken by the vote to leave the European Union. There was an instant panic amongst international investors, and as a result, the UK’s financial market took a heavy loss.

The uncertainty surrounding the Brexit vote has yet to subside, and as the process to leave the EU is expected to take several years, the impact of this referendum still isn’t fully realized.

But as it has been over two months since that historic day, I wanted to investigate if Yorkshire has come out intact following the immediate impact of a post-Brexit market.

Firstly, let’s look at a staple sector in the region’s business landscape - manufacturing. For the month of August, Yorkshire had the lowest proportion of manufacturers at higher than normal risk of insolvency in Great Britain.

Research by insolvency trade body R3, showed that of the 12,187 active businesses in the sector in Yorkshire, just 2,253 or 18.5% were identified as being at higher than normal risk. The only region which put in a stronger performance was Northern Ireland with 18.2%, while the average across the UK was 21.5%.

The uncertainty surrounding the Brexit vote has also failed to slow Yorkshire’s bustling property market. According to property consultancy Knight Frank, take-up of industrial units over 50,000 sq ft totalled 1.2m sq ft across the region in the first half of 2016, which is 7% above the level of take-up over the same period last year and comparable to the five-year average.

More specifically, the success of the region’s property office market has bucked the national trend, remaining unscathed by the referdenum. For example, Bilfinger GVA, the commercial property company, has reported that the Leeds office market will see a strong second half 2016.

Although there was a slight slowdown in activity during the second quarter of 2016 nationally, Leeds saw an increase in demand for city centre opportunities. This was highlighted by a number of significant deals, including Addleshaw Goddard increasing its presence at 3 Sovereign Square by 8,000 sq ft, in addition to the 51,000 sq ft already occupied.

The city has also seen increased take-up of out of town space and a trend towards owner-occupiers in this sector.

Evidence

Town Centre Securities (TCS)

Town Centre Securities (TCS), the property investment and development company, has managed to avoid any negative impacts from the Brexit fallout. The firm is currently working on its largest development programme in almost 50 years, which is a sign of confidence for the commercial and residential markets.

TCS is currently on site with a 136-bedroom Premier Inn Hotel at Whitehall Riverside in Leeds, and the refurbishment of Merrion House offices at the Merrion Centre in Leeds. This project consists of refurbishing and developing offices in partnership with Leeds City Council, totalling approximately 170,000 sq ft when complete in early 2018.

Development also continues in the Merrion Centre with a new 134 bedroom Ibis Styles hotel and a Marco Pierre White restaurant scheduled for completion in the first half of 2017.

Henry Boot PLC

Henry Boot PLC, the Sheffield-based property developer, shunned any post-Brexit fears after reporting that revenues rose to £107.3m for the first six months of the year. The company also saw an increase in operating profits of 59% at £21.1m. This strong financial performance is a result of higher land sales and additional property development activity.

Chairman Jamie Boot said: “Henry Boot PLC is inextricably connected to the UK property market, whether that be housebuilding, commercial development, construction or plant hire.

“Two months after the EU referendum, it is probably a little early to judge how the UK property market will react over the longer term, however, our experience is that the trading activity and any deals we had in progress are proceeding as envisaged and the future pipeline is coming to fruition as we would have expected.”

Exporting

It is also worth noting that Ben De Smit, an economic and commercial counsellor at the Belgium Embassy in London, is set to visit Yorkshire later this month to discuss possible opportunities for UK exporters in continental Europe.

Mr De Smit’s visit follows on a statement from the prime minister of Belgian region Flanders, Geert Bourgeois, who said that Flanders wants a UK trade deal as part of creating a North Sea Union which would operate in a similar way to the Mediterranean Union and could also comprise Denmark, Germany, the Netherlands, France, Sweden, and Norway.

Conclusion

Once the dust settled from the initial panic of the Brexit vote, evidence suggests that key markets in Yorkshire are still strong and will continue to be the driving force behind the region’s economy. However, as the true impact of leaving the EU won’t be fully felt for the next several years, the fate of Yorkshire in a post-Brexit is largely unknown.

In the meantime, the UK’s business community will be eagerly waiting to see Chancellor Philip Hammond’s post-brexit Autumn Statement which will be delivered in November.

Looking to promote your product/service to SME businesses in your region? Find out how Bdaily can help →