By Daniel Holland LDRS

City leaders have warned that Newcastle’s economy will be hit with a devastating shock in the event of a no-deal Brexit.

The UK government is still yet to agree a trade deal with the European Union, ahead of the end of the Brexit transition period on December 31.

Newcastle City Council leader Nick Forbes has warned that a no-deal outcome would cause a “serious economic shock”, which would be particularly damaging on top of the catastrophic impact of Covid-19, and urged the government to  strike “any deal, no matter how flimsy” with the EU.

Local authority chief executive Pat Ritchie also warned at a cabinet meeting on Monday night that a no-deal scenario could cause higher food prices and a shortage of goods, fearing the impact it will have on “communities who are already struggling to be able to feed their families”.

Coun Forbes said: “On top of the Covid crisis, which has affected particularly the leisure, hospitality, culture sector of the city very deeply indeed, a no-deal Brexit scenario would affect another bit of the economy – particularly our manufacturing, production, and export capacity.

“That compound economic shock is one that we have been raising as a very serious prospect with government in the eventuality of a no-deal scenario, or even in a deal scenario which doesn’t cover all of the issues that businesses continue to raise with us as areas of major concern.”

The Newcastle Labour leader also called on Prime Minister Boris Johnson, who said last week that he was “full of confidence” about the North East’s ability to bounce back from the impact of Brexit and Covid, to sign any deal with the EU.

The North East is expected to be hardest hit by Brexit, and studies have shown that a no-deal outcome could shrink the area’s economy by more than 10% – £7 billion a year by 2034.

Coun Forbes added: “At this stage, virtually any deal would be better than a no-deal scenario, which we know would be catastrophic for the economy of this region.

“Any deal, no matter how flimsy, would be harm minimisation against the prospect of a no-deal scenario.”

However, the council’s Liberal Democrat opposition has questioned whether the council has the financial firepower or the urgency to shield local businesses from the impact of Brexit.

Opposition leader Nick Cott said that Brexit matters had “very little prominence” in the council’s latest budget proposals .

He said: “The North East has potentially the most to lose out of all regions, particularly from a no-deal Brexit, which would hit our manufacturing sector and its supply chains hard. The position of our retail and services sectors, given the impact of the coronavirus, means they are not currently in a position to step in to provide new jobs in the short-term, and we’re therefore facing a potential crisis of unemployment.

‘It is imperative that the council and its partners have a clear and unambiguous plan for mitigating the impact of Brexit on the city.

‘Whilst we recognise that council officers have been working hard to put plans in place, the opposition has some concern that at this late hour Brexit does not appear to have the level of urgent political oversight that could be expected from the Labour administration of the council.”

Ms Ritchie said that the city council stands “ready to respond” regardless of whether a trade deal is agreed and that funding had been identified from the North of Tyne Combined Authority to support industries damaged by Brexit.

However, she added: “Covid’s impact might be short to medium term, although it is difficult to say, but Brexit could be structurally damaging depending on the outcome of the negotiations that are taking place at present.”