Some, including Governor of the Bank of England Mark Carney, have predicted a possible recession for the UK if the vote is for leave tomorrow. In the final countdown to polling day, Marianne Sensier argues a Brexit could lead to less resilience to recession, particularly in our regions.

A few years ago, Mike Artis and I carried out research  investigating the Welsh economy’s resilience to recovering from recessions since the 1970s. The Welsh economy has undergone reorientation and renewal since the deep crisis of the 1980s.  It was more resistant than the UK to the 1990s’ downturn and had recovered its pre-recession peak from the 2007 crisis in 2012.

Our conclusion was that the Welsh employment cycle has become more resilient over time and the Welsh Government’s ProAct policy introduced in 2008 helped businesses keep workers employed over the recession. ProAct was part financed by the European Social Fund.

Diversity increases resilience

Conclusions reached by an ESPON funded project “Economic Crises: Regional Resilience” that I worked on based at Cardiff University showed that by far the greatest influence on the resilience of a region is the form and structure of the economy. A more diverse economic structure provides greater resistance to shocks than does a more specialised structure, since risk is effectively spread across a region’s business portfolio.

The IMF and OECD, as well as the Bank of England, predict a possible recession for the UK if the #‎EUref vote is for leave. I agree with their predictions but for the balance of argument I have read the reports on the Economists for Brexit web page . The economist leading this group is Patrick Minford (former adviser to Margaret Thatcher).

The reports are grim reading as there is no mention about replacing funding support for UK regions (like the European Social Fund). They say they will support agriculture but leaving the EU will “mostly eliminate manufacturing” (Minford as quoted in the Sun).

Official Labour market statistics  (workforce jobs by industry to March 2016) estimate the number of  people employed in manufacturing jobs in the Northern Powerhouse regions of N.West, Yorkshire and Humberside and N.East is 748,000. The proportions are North West: 346K; Yorkshire & Humberside: 285K; North East: 117K and some not inconsiderable 2.68 million nationally.

That seems to me to be a high price to pay to boost the financial services sector that will on balance be helped by a leave vote and allow removal of the cap on banker’s bonuses set by the EU in 2014.

The City and Brexit

There is some debate on this but I think a vote to leave will make the City of London stronger. The vote leave campaign say that if they get the majority vote on Thursday they could take up to 4 years negotiating trade and will then put in for Article 50  in 2020 which could take another 2 years. That means a possible 6 years of uncertainty during which there will probably be a recession. And who makes money out of recessions and the subsequent volatility in the stock and asset markets? Hedge funds do .

The economies of our regions will, in my view, be more secure with greater diversity and a more stable City of London.

• Research by Marianne Sensier , Gillian Bristow and Adrian Healy into the resilience of European regions recovering from recession has been published and is freely available

• Further discussion of some of these issues and related analysis can be found in a blog post from the Centre for European Reform “Brexiting Yourself In The Foot: Why Britain’s Eurosceptic Regions Have Most To Lose From EU Withdrawal” and in another from London School of Economics “The ‘Britain Alone’ scenario: how Economists for Brexit defy the laws of gravity”