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The Progressive Policy Think Tank

At the crossroads: Regional trade in the North East

The first in a new series of reports exploring the links between the North East's economy and its current and potential trading partners provides an in-depth examination of trade flows between the region and key EU countries, and other destinations within the UK.

The North East is exceptional among English regions both in having recorded a positive balance of trade for most of the past 20 years, and in the scale of its goods export growth over the past decade. The available data suggests that the region’s exports to its domestic neighbours – London, Scotland and the rest of the north of England – are also strong. This is unsurprising. The North East sits at the intersection of these four important markets and, with its good connectivity, it plays a vital role as a burgeoning trading hub.

However, it stands at a crossroads in another sense, too. Because a greater proportion of its trade is with the EU than that of other English regions, the impact of any change in Britain’s relationship with the EU – positive or negative – will be greater for businesses in the North East than for those elsewhere. Furthermore, the region’s dependency on the export of road vehicles and chemicals is too great. And, given that its trade with the North West and Yorkshire is of a higher value than that with any other EU nation, its relationship with the ‘northern powerhouse’ is also critical.

For these reasons, the North East Local Enterprise Partnership must provide targeted support to help the North East’s businesses to trade outside the region, and it must press ahead with its smart specialisation programme to address the region’s dependence on a narrow range of goods exports. More widely, the North East’s business representatives and local authorities must play a full part in the northern powerhouse initiative, and develop more formal links with Scotland.