Britain has voted to leave the EU – but what happens now and how will the decision affect people in the North-East? Legal expert Nick Winney looks to the future

DAYS before the EU Referendum, Britons were already feeling the impact of a Brexit vote. Financial markets hate uncertainty and, with the referendum too close to call, the pound has taken a battering over the past week.

Fears about a Brexit may not be the only reason for the chaos on the currency markets in recent days but history suggests they have played a factor. The pound tumbled before the Scottish referendum too, and stuttering investor confidence caused a ‘wobble’ shortly before the General Election last year.

Now Britain is heading for a Brexit, the markets face months – if not years – of uncertainty as the government seeks to untangle itself from EU regulation and prepares to go it alone.

In the short-term, this is almost certain to have an adverse impact on the economy due simply to uncertainty over what the future will bring.

How might this affect the North-East? From Nissan to Hitachi, our region has a strong record of winning foreign investment but, in the immediate aftermath of the Brexit vote, it will be harder to convince overseas companies to spend their money here. Inward investment will be impacted due to uncertainty as to whether the UK will be as “safe” a place to invest once it departs from its current EU status.

Big multinationals already here may also re-examine their investment plans. Aero engine maker Rolls-Royce has already warned that Brexit may put plans for its new £65m testing plant at risk. In the North-East, Nissan’s Sunderland car plant is well used to competing for work with other European factories, and its outstanding productivity record should stand it in good stead going forward, but management will be hoping the UK can sign advantageous trade deals with the EU as soon as possible.

The region’s universities may also suffer due to their dependency on EU funding to support research and development initiatives. They will be looking to the UK Government to underwrite their work by providing funding to replace lost EU grant aid.

Other industries which depend on EU subsidy, funding and state aid exemptions will be adversely impacted because of uncertainty over whether it will continue, and on what basis. The European Regional Development Fund awarded £255m to the North-East between 2007 and 2013 and the European Structural Investment Fund is spending tens of millions more to support growth and jobs.

Significant sums are also made available to the UK by the European Investment Bank for various types of investment in emerging industries, in particular investment in sustainable energy and the green and digital economies. These industries are an important part of our future economy, particularly in Teesside, as more traditional manufacturing, such as steel, declines.

Under the terms of the Lisbon Treaty it could take up to about two years for the UK referendum vote to take legal effect, depending on when the UK serves the formal notice under the treaty to leave the EU. After that, there is a period of negotiation with the EU as to the basis upon which the UK leaves and the extent to which it continues to have any form of trading and legislative relationship with the EU. This could take several more years, during which time businesses will face a fast moving legal landscape as regards their rights and responsibilities. Everything from employment rights of foreign workers to trade tariffs will be up in the air.

It is also possible, if not likely, that the UK’s credit status as a nation will suffer as a result of economic uncertainty. This could impact on our ability to borrow money and issue government bonds, increasing the cost of borrowing and reducing the ability to reduce the national deficit.

Longer term, Brexit gives the UK more power over its own destiny. The government will be able to draw up its own rules on state aid and tariffs which could give home-grown manufacturers a boost. However, these will not kick in for several years or even at all, depending on the terms of any deal with the EU that we do. Such a deal could well see state aid and tariffs being unlawful and in breach of a treaty with the EU.

Of course, life goes on and, for now, Britain still remains a member of the EU. TodayOn Tuesday, the EU will publish its draft spending plans for the next seven years. It will also unveil a raft of new measures covering everything from cross-border checks to a controversial European military strategy. It will be interesting to see how our soon-to-be-erstwhile partners react to the grim news coming from Britain.

NICK WINNEY is a solicitor with Hewitts, one of the region’s largest legal firms. He grew up on Teesside and has more than 20 years’ legal experience in both the public and private sector.