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End of Brexit transition period marks “period of significant disruption” for Welsh economy

17 December 2020

Welsh and EU flags

Businesses in some key sectors of the Welsh economy need increased support to operate beyond the Brexit transition period, academics at Cardiff University say.

A report from the Wales Centre for Public Policy concludes that businesses may face “a period of significant disruption” from 1 January, with longer term adjustments including investment in cross sector innovation and research and development being necessary for the health of the future economy. It adds, “how well businesses are equipped and able to respond will be crucial for both their survival and success”.

The researchers recommend that the Welsh Government encourages reskilling and supports increased employment in customs, digital infrastructure and logistics to cope with the anticipated surge in demand from businesses.

It also recommends emergency funding for businesses in sectors such as agriculture and fisheries, automotive and life sciences, which rely on seamless border processes and could be badly affected by delays at ports.

Dr Helen Tilley, Senior Research Fellow at the Wales Centre for Public Policy, said: “Even though a deal is hoped for and will be the best outcome for Wales, an agreement so close to the transition’s end means businesses will have very little time to understand the impact on day-to-day activities. As this would leave them ill-prepared for the changes to come in 2021, it is hoped that a grace period could be extended to more businesses who will need time to prepare.”

Practical guidance and emergency financial support will be vital if businesses are to continue operating effectively. Sectors are already working to mitigate the impact of Covid-19, but the disruption has now escalated and the effects will be felt for a long time to come.

Dr Helen Tilley Senior Research Fellow, Wales Centre for Public Policy

The report published today (17 December) presents findings from an evidence review, analysing the implications of the transition for the Welsh economy’s key sectors.*

It found that key sectors will require greater support to maintain and improve their position, especially those that produce component goods – including automotive, aerospace and steel – and those exporting fresh produce to the European Union, such as agriculture and fisheries.

Researchers say their findings also highlighted the implications for Wales of the UK Government’s plans for the UK internal market.

Dr Tilley said: “Tuesday’s introduction of common frameworks to the Internal Market Bill is an important recognition of the devolved settlement in the UK. It does however still allow the UK Government to override the Welsh Government in some areas so continued attention to the details will be necessary.”

The Wales Centre for Public Policy is part of the UK’s What Works network and enables policy makers in Wales to access and apply independent evidence and expertise that can improve policy making. The Centre is a member of Cardiff University’s Social Science Research Park (SPARK) - a collective of leading social science research groups that work together to develop innovative solutions to societal problems through collaborative research activity, and will be co-located in a new innovation hub, sbarc, in 2021.

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