European regions in urgent need of a Brexit strategy

Harbour installations at the Belgian port of Zeebrugge, [EPA/MAURITZ ANTIN]

Brexit will have many practical consequences for the regional economy. Port cities like Zeebrugge in Belgium, which trade a lot with Great Britain, will be particularly affected.  EURACTIV Germany takes a look at both sides of the Channel.

Huge container ships pass through the port of Zeebrugge in Belgian Flanders every day. More than 17 million tonnes of cargo was shipped from the small Belgian city to the UK last year, and an impressive 78% of all British exports arrive at the port.

But from 29 March 2019, the day of Brexit, things will be different in Zeebrugge. Studies on the effect of Brexit assume that primarily trade-intensive regions, especially port cities, will be affected by Brexit.

Karl Vanlouwe is a member of the Belgian Parliament and represents the Flemish region in the Committee of the Regions of the EU. He is very worried about what Brexit could mean for Flanders. “The main goal of the Flemish Government is to have a soft Brexit. We rely on low tariffs, no one wants a border with the UK as there was before,” he says.

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Especially port cities are likely to feel the effects of Brexit in very practical terms. If customs controls are reintroduced, this means a considerable logistical and spatial effort. In particular, goods for “just-in-time” production, such as components of the approximately 2.8 million new vehicles that pass through Zeebrugge annually, will have to be quickly brought through customs and shipped.

In view of this, more than 140 new customs officials will be hired and trained in Zeebrugge next autumn, said Belgian Finance Minister Johan Van Overtveldt.

Brexit has to get out of the conference rooms

On the other side of the English Channel, in the land of black humour, there are already jokes: the access road to the port of Dover would soon become a parking lot for thousands of cars. There simply isn’t enough room to expand the port capacity should the border be reintroduced and the cars start backing up.

“All these regional and industry issues are not really talked about yet. Of course, this is a big issue in corporate conference rooms. But the public desperately needs a wake-up call,” says Sir Albert Bore, a Birmingham City Councillor and also a member of the Committee of the Regions.

“If people were aware of the countless, complicated consequences of Brexit, I do not think they would have voted for it,” he says.

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Bore’s region also has a lot to fear from a hard Brexit, because Birmingham is an important location for the automotive and aerospace industries. The German company BMW produces engines for its Jaguar Land Rover engines, about 800 jobs depend directly on the production. If no trade agreement is reached after Brexit, the customs rules of the World Trade Organisation will apply.

Ten percent import tariffs on cars and over four percent on vendor parts would then be levied, according to German KfW Development Bank. This is likely to be a major cost factor for Birmingham-based production, especially since there are many suppliers for production in the EU. Most likely, they will not all be serviced by the UK market.

“This will probably bring the prices up. And who knows if BMW will continue to produce with us in the long term, “says Bore. “We exclude ourselves from all the advantages of the internal market.”

Need for sincere communication

The question is what regions can do to protect their economy. Sir Bore gives an example from Birmingham: When BMW relocated large parts of its production to Oxford in 2001, the city council drew up an economic impact assessment and localised all those involved in the production chain.

Through targeted training and programmes one has been able to cushion the impact quite well, says Bore. And that is exactly what regions should do for their key industries, he concludes.

It is necessary to create a framework for local companies and, as far as possible, set up aid programmes. Some regions, like Flanders, have already carried out Brexit analyses. However, according to the Committee of the Regions, this applies to a maximum of one-third of all EU regions.

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“Above all, politicians must communicate in a sincere and unadorned manner what this will mean for the regional economy,” demands Bore. “So far, I do not see any public debate about it. We are sleepwalking into a possible economic catastrophe. ”

Back in Flanders, Karl Vanlouwe and a delegation of EU regional representatives visited the port of Zeebrugge. “The mood of the port employees was clear: we are preparing for the worst – and hope for the best.”

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