ADD2242 London’s exposure to trade disruption from EU exit

Type of decision: 
Assistant Director's decision
Date signed: 
27 June 2018
Decision by: 
Jeremy Skinner, Assistant Director of Strategy, Insight & Intelligence

Executive summary

Approval is sought for expenditure of up to £50,000 on external service to prepare an assessment and a report on the exposure of London’s economy and sectors to trade disruption due to the UK leaving the European Union. The analysis will focus on how exposed London’s economy and different sectors of it are exposed to any post-Brexit trade disruption. It will focus on exposure risks rather than seeking to predict and quantify the extent to which these risks will materialise, which will depend on the final deal achieved in negotiations between the UK and the EU. It will assess the impact of trade disruption both directly due to various sectors trade exposure to the EU and importantly indirectly, due to sectors exposure via supply chains. By considering trade relationships between London and the rest of the UK it will also examine London’s economy (and sectors) indirect exposure to post-Brexit trade disruption, i.e. disruption that reflects primary disruption of EU trade in the rest of the UK. This will aid the Mayor in coordinating the GLA’s preparations for Brexit, e.g. in terms of prioritising risks and mitigation actions for the worst-affected sectors (be it in terms of seeking to influence the UK’s negotiating priorities or seeking to compensate the impacts of the deals that will be ultimately achieved). The GLA will require the analysis and report to be completed by the third week of September 2018.


That the Assistant Director of the Intelligence Unit approves:

• Expenditure of up to £50,000 on forecasts, analysis and a report on the possible impacts of Brexit on London’s economy.

*Please note that this project did not proceed but the decision has been published for transparency.

Part 1: Non-confidential facts and advice

Introduction and background

Research published by a number of organisations since the June 2016 referendum has highlighted how the impact of the vote to leave the EU is one of the largest potential economic effects on both the London’s and the UK’s economy, in both the short and in the long-run. However, the sectoral exposure of London and the UK due to indirect effects via supply chains has seen less research undertaken .

In the short-run, beyond the direct impact of the decline of sterling, the impact of Brexit on UK trade is likely to have been limited. While the long-term impact of the vote to leave the EU is very dependent on what post-exit deals the UK negotiates with the EU and other countries around the world.

Still it is likely that trade disruption will occur. In order to examine this belief objectively and to plan the response to Brexit, the GLA needs to know the potential exposure (both directly and indirectly) of London’s economy to trade disruptions and for this exposure to be expressed in terms of headline numbers. As well as this a more detailed analysis of the exposure of the sectors of London economy to trade disruption is also needed. The GLA further needs to know the exposure to trade disruption of rest of the UK and, specifically, how the disruption in the rest of the UK will play through to London and conversely how the exposure of London will play through to the rest of the UK via supply chain linkages.

Objectives and expected outcomes

To produce analysis of the exposure (both directly and indirectly) of London and the rest of the UK to disruptions in trade due to the UK leaving the EU. An example of recent analysis that looks at this regional impact in some detail is Chen, w. et al (2017), however the GLA envisions that the procured analysis would go beyond the depth currently via more detailed sector level breakdowns.

It is envisioned that this analysis will present this exposure in a number of ways including but not limited to:

• As a percentage of GVA in London and the UK’s.
• As a percentage of local labour income in London and the UK.
• By detailed standard sector by GVA and local labour income.
• By bespoke sector to be defined by the GLA in consultation with the successful bidder by GVA and local labour income.

Further analysis will examine the impact will include, but not necessarily be limited to:

• The exposure of the rest of the UK (both aggregate and at a sector level) via interlinked supply chains to London’s exposure to Brexit.
• The exposure of London (both aggregate and at a sector level) via interlinked supply chains to the UK’s exposure to Brexit.
• The exposure of London and the UK (both aggregate and at a sector level) of improved trade access to selected key trading partners such as (and not limited to) the US, Canada, Australia, New Zealand, China and India.
• The results of this analysis should also if possible be compared with estimates of exposure across Europe from the available literature.

An Invitation to Tender will therefore seek a suitable organisation to undertake research to develop our understanding of the possible exposure of London’s economy to post Brexit disruptions in trade. This process will require the delivery of detailed forecasts for both the immediate and the long-term impact of the Brexit process.

Equality comments

No adverse equalities impacts are identified. The analysis and report will support the GLA’s equalities objectives by helping to inform the Mayor about which parts of London are likely to be most exposed to trade disruption due to Brexit.

Other considerations
  1. The contract will be procured via TfL procurement.


  1. If this analysis was not carried out it would limit the GLA’s ability to plan how best to respond to the impact of Brexit.


  1. As regional data is more limited than national level data it is possible that data limitations may lead to inaccuracies in the calculated exposure to Brexit related trade disruptions. However, regional trade data is available via the ONS and has been used in similar analysis in the recent past[1]. Successful candidate will also have access to GLA Economics’ currently unpublished calculation of Input/Output tables for London.


  1. All bids will be considered against technical criteria and value for money assessment. The breakdown of assessment for bids will be based on 75% of the available marks assigned to technical aspects, and 25% relating to the price quoted to undertake the research. The specific criteria are outlined in the following table:




Understanding of the GLA’s requirements


Quality and rigour of the methodological approach


Previous experience to undertake this research


Technical skills and ability to undertake this research


Quality assurance processes and outlining project risks


Price quoted for the research



[1] See for example: Chen, w. et al (2017). ‘The continental divide? Economic exposure to Brexit in regions and countries on both sides of The Channel’. Papers in Regional Science.

Financial comments

The expenditure of up to £50,000 will be split between the EPMU & Communities and Intelligence budget for 2018-19, held within both the Resources and Communities and Intelligence Directorates.

Activity table
  1. As part of their delivery of their results the successful candidate will be expected amongst other output to deliver a report (including within it an explanatory narrative about integrated supply chains and value added chains, and why they impact on this analysis of UK exposure), full access to the output numbers, a slide pack summarising key results and an analytical assurance statement setting out the steps that have been undertaken to ensure that the overall analytical approach was reasonable and fit for purpose. The following table gives an outline of the provisional timescales for this research, however bidders are invited to suggest amendments to intermediate milestones within their tenders, or recommend timescales based upon the approach they wish to use to address the needs of the GLA:



Target Completion

Invitation to Tender posted

29th  June 2018

Deadline for submissions

13th July 2018

Review of received bids and invitation to clarification meeting (if necessary)

w/c 18th July 2018

Appointment of successful supplier

w/c 16th July 2018

Inception meeting with project steering group

w/c 23rd July 2018

First draft of report to be sent to the GLA

17th August 2018

Review of draft and steering group meeting

27th August 2018

Second draft of report sent to the GLA

17th September 2018

Report completion and presentation to internal stakeholders

24th September 2018

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