The expert economic analysis commissioned by the Mayor reveals that the worst-case scenario – a no-deal hard Brexit – could have a severe impact on these sectors, which are among the most vibrant and dynamic parts of the economy.
Across the UK such a scenario could result in 92,000 fewer new jobs – of which 11,000 could be in London, along with as much as £2 billion less economic output (gross value added) in the capital.
In this Brexit scenario, the UK would leave the Single Market and Customs Union in March 2019 with no transitional deal in place – something the Mayor believes is still a real possibility, given the Government’s mishandling of the negotiations.
The findings are contained within independent analysis by Cambridge Econometrics of the potential impact of five Brexit scenarios across nine key sectors of the economy.
The analysis indicates that the harder the Brexit, the more severe the economic damage. The impact of the hardest possible Brexit could be disastrous for London and the UK.
Even if there is a two-year transitional deal and the UK then remains in the Single Market and Customs Union, there could be 36,000 fewer new science and tech jobs across the country, including 5,000 in London.
Across the UK, in the worst-case scenario there could be 482,000 fewer jobs, together with almost £50 billion of investment lost by 2030. The annual average rate of growth could slow from 1.3 per cent to 1.1 per cent. Even in the softest of Brexit scenarios, there could be 176,000 fewer new jobs UK-wide.
London’s Chief Digital Officer, Theo Blackwell, said: “London’s science and tech sectors are some of the most innovative and exciting parts of our economy and are the rival of anywhere in the world for their dynamism and creativity.
“A no-deal Brexit runs the risk of completely undermining the growth and development of recent years and could see London fall way down the league table of global science and tech hubs.
“This independent analysis will shock the sector – Government must take action to safeguard jobs, investment and growth, or else we risk turning back the clock on years of progress and threatening our future prosperity.”
Founder, CEO and Board Director of E2E and member of the Mayor’s Business Advisory Board, Shalini Khemka, said: "Whatever the exact impact of Brexit, it seems clear that as it currently stands it will create greater uncertainty and concern for all businesses.
“As someone who represents the entrepreneurs who are the lifeblood for growth in our economy, the government needs to provide certainty as to the economic and employment prospects for the country on which our economy depends."
CEO of biopharma company hVIVO and member of the Mayor’s Business Advisory Board, Kym Denny, said: “The UK is a global leader in life sciences and its future is bright. However, the uncertainties of Brexit have led to many questions about our ability to sustain this leadership position.
“This analysis commissioned by the Mayor, and the insights it provides regarding the Brexit scenarios and their potential impact, will be a critical tool for guiding decision-making regarding the best path forward to protect the UK and London’s economy, prevent the loss of thousands of jobs in our vibrant life sciences sector and safeguard the future of this vital sector.”
Chairman of Doddle and member of the Mayor’s Business Advisory Board, Lloyd Dorfman CBE, said: This report makes for worrying reading. As we negotiate our exit from the EU, I would like to see us retain as many of the benefits of the single market as possible.
“What should be front and centre is maintaining London’s position as the leading financial centre in the world, a vibrant place for entrepreneurship and a welcome city for all people to work and visit. I was a firm remainer in the vote, but now we have had the vote, we need to knuckle down and make the best of things.”
Co-founder of Allbright and member of the Mayor’s Business Advisory Board, Debbie Wosskow, said: “These figures shine a light on the economic damage that a Hard Brexit could cause for London and the entire UK. The only way that we can limit the damage is through continued membership of the Single Market and the Customs Union.”
Ben Gardiner, Director, Cambridge Econometrics, said: “This is the first time that the various impacts of Brexit – trade, investment and migration - have been comprehensively assessed across a number of key indicators and sectors at sub-national level.
“Our analysis is particularly valuable to local leaders because it indicates the potential impact on employment and output of Brexit under a range of scenarios, which is necessary given the uncertainty surrounding the final outcome of negotiations. Rigorous analysis and robust evidence such as this could also be usefully applied to other parts of the UK helping political and business leaders plan for the future.”
Both the Mayor and Cambridge Econometrics are clear that this analysis is not a precise forecast of what will happen. There are a large number of factors that could impact on these scenarios, not least the details of any final deal with the EU or trade deals struck with any countries. The analysis does however highlight the scale of the comparative risks associated with each scenario and potential outcome from the negotiations.