Report of the Strategic Director of Housing, Environment and Healthy Communities
The Committee received a report seeking views on the ongoing impact of Brexit on businesses large and small in Gateshead and the North East.
From the report, it was noted that although the UK formally left the European Union (EU) on 31January 2020, the unwinding of such a long standing, intertwined relationship is complex; the exit process is expected to continue for some time, spanning trade, regulation, investment, competitiveness, access to finance, labour, and goods. It was highlighted that Gateshead Council is working collaboratively with local and regional partners to:
· Gather intelligence, understand, and monitor the impact of these changes for businesses.
· Support businesses to navigate the EU Exit transition period, build business resilience to adapt successfully to a post Brexit economy.
· Continue investing in the local economy to ensure businesses, the workforce and residents thrive.
It was reported that there has been implication for businesses large and small due to changes to international trade and regulation. It was also noted that changes to customs and border checks on goods entering the country have also impacted to ability for businesses to trade depending on the type of goods involved.
The Committee were advised that local business research and intelligence has shown that businesses are concerned about the rising price of energy, raw materials, goods and labour. It was further reported that in March 2022 a Team Valley manufacturer reported a 10% increase in the price of steel imported from Europe.
It was highlighted within the report that intelligence gathered by Business Gateshead’s Strategic Account Management (SAM) function corroborates business disquiet about rising prices. The Committee noted that a Gateshead based packaging manufacture reported a 70% increase in the cost of polymer and other raw materials. It was also noted that wider supply chain issues included increased delivery lead-in times due to EU labour shortages in the logistics sector.
Additionally, the Committee were advised that food producers are also reporting recruitment and workforce capacity issues and problems with logistics due to a lack of European labour.
The Committee were provided with an overview of business reaction to the New Free Tradge Agreement in addition to details of the North East Trade and Export Strategy, this strategy aims to support businesses across the region to:
· Counteract the impact of EU exit on established trading relationships.
· Build on existing export strengths.
· Develop new export capabilities.
· Diversify into new global markets in sectors and countries with long-term growth potential.
The Committee were also provided with details of the UK Shared Prosperity Fund and the Levelling Up Fund. It was noted that the Government has replicated elements of EU investment in regional and local economies with some key differences that were summarised.
It was concluded that businesses large and small across Gateshead have experienced unprecedented change and uncertainty following EU exit, compounded by the pandemic, global forces and competition for materials and skilled labour.
The Committee were advised that in the medium-term businesses will require ongoing support to mitigate inflationary cost pressures, to invest in long-term growth, skills development and job creation. Assurance was provided that the Council will continue engaging with the local business community to allow companies to access the support they need to thrive in the borough. The Committee were also provided with case studies to illustrate the support being provided by the Council to local businesses.
The Committee questioned what support is being provided to local businesses being impacted by the skills shortage. Officers advised that this was a regional issue, particularly for smaller businesses. It was highlighted that there is a skills agenda and work ongoing with education providers to bridge the gap in skills. It was also noted that ESF replacement funding is to be used.
The Committee were provided with an overview of the North East EU Exit group which covers the LA7 authority areas. It was noted that intelligence is shared monthly. The Committee were also advised that support is available via the Council and some voluntary sector organisations to support small-medium businesses with applications to bid for funding.
The Committee expressed thanks to officers for the work they are doing. The Committee also requested an additional update on the impact of Brexit on businesses within Gateshead at a future meeting.
(i) The Committee noted the information within the report.
(ii) The Committee requested an additional update at a future meeting; this is to be added to the Work Programme.