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Thursday, 11 August 2016

Member Blog: Is the North / South divide making a comeback post Brexit?

By Paul Burke, Managing Director of Davenham Asset Finance

A report by Manchester City Council’s Chief Executive, Sir Howard Bernstein, has been leaked recently, revealing that Greater Manchester is set to miss out on £320m after the decision for the UK to leave the EU. 

Pre-Brexit, Greater Manchester was expecting to receive £176m of the European Regional Development Fund and £145m of the European Social Fund up to 2020, an amount that had to be matched by a minimum of 50% non-EU funds, creating a total programme of almost £650m.
Initially, it had been stated that there had been “significant delays” on the funding agreement meaning only £36m of funding had been contracted for Greater Manchester, but after the referendum, the government promised that existing EU funding contracts would be honoured although no new ones would be signed.

The Interim mayor for Greater Manchester, Tony Lloyd has urged the government to "replace funding" lost through Brexit, and to “live up to the promises made during the referendum campaign” and rightly so we say. A spokesperson for HM Treasury has reassured that the government has ensured that EU funding is directed towards the UK's economic priorities, like the Northern Powerhouse.

However, further reports seem to show that this is far from the case, with North West listed companies losing around £1.4bn due to Brexit uncertainty, according to a recent article by Bdaily North West. It’s bad news for large corporates as the largest North West firms are believed to be the worst hit, as the 15 FTSE 250 companies in the region collectively losing £1.2bn.
Fortunately, despite ongoing market uncertainty, a number of North West-based companies have demonstrated strong trading, proving that the Northern Powerhouse is still fully intact.

Being based in Manchester and proudly part of the ‘Northern Powerhouse’, the team at Davenham are on hand to provide effective asset finance and refinance solutions and work in partnership to advise on any funding requirements / issues which may have occurred as a result of the decision; see our blog on Brexit. To speak to a member of our friendly and experienced team, call 0161 832 8484.

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