British economy

Welcome to Brexit Town

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Hartlepool is home to one of Britain's nuclear power stations.
  • Why it matters

    Why it matters

    Britain’s Brexit vote was won in industrial heartlands such as Hartlepool yet there is no evidence that it will benefit them economically.

  • Facts

    Facts

    • Hartlepool is a town of 93,000 people in northeast England on the North Sea coast.
    • In the recent referendum, 69.9 percent of Hartlepool voters cast ballots in favor of leaving the European Union.
    • The British economy will suffer acutely from increased uncertainty as a result of the Brexit vote, according to reports.
  • Audio

    Audio

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The video shows a broad, sandy beach on England’s North Sea coast, then a stretch of wetlands and a seal. A marina fills the screen, then a white clock tower and a strip of coastline. The video doesn’t fail to impress the town’s councilmen.

“When I saw the new video, I thought for the first time: Wow, I live in such a fantastic place,” said a local politician in Hartlepool in northeast England.

But this is what the video’s idyllic scenes don’t show: The wetlands are a wasteland amid a nuclear power plant, an oil refinery, six enormous cooling towers, abandoned aluminum works and the Tata steel mill, which faces closure. The marina is an abandoned coal-shipping dock, the clocktower houses public toilets, and offshore wind turbines mar the coastline.

“The people here have nothing to lose. It can’t get any worse.”

Kevin Cranney, Town councillor, Hartlepool

Nevertheless, the town councilmen are having big thoughts at their meeting in the town hall: The officials envision a luxury hotel, the founders of startup companies sitting in the old cafés, and a road to help open up the wetlands.

Hartlepool is living on the remnants of a once proud British industry – and from dreams likely never to be realized.

While the Labour Party’s town councilmen want to re-imagine the destitute industrial site as an excursion and startup paradise, the town’s citizens chose another dream: Brexit. In the recent U.K. referendum, just under 70 percent of Hartlepool voters cast ballots in favor of leaving the European Union.

Hartlepool makes it clear why Britain’s new prime minister, Theresa May, has no other choice than to make good on her statement, “Brexit is Brexit.” She risks alienating voters irrevocably if she doesn’t.

“The people here have nothing to lose. It can’t get any worse,” said Hartlepool town councillor Kevin Cranney.

Mr. Cranney is a Labour Party member who bucked the party line and supported the Leave campaign. He is also chairman of the municipality’s Regeneration Services Committee and is pushing forward the town’s hoped-for renewal with millions from the E.U. regional fund.

While advocating for the Brexit vote, Mr. Cranney blamed the central government in London for the decline and unemployment in northern England. The U.K. parliament, he says, has forgotten the region and is investing in London and sending subsidies to Scotland. Nothing is left for northern England, he says, not even a motorway to Edinburgh.

Brexit was a desperate cry for help, he says, adding that if the E.U. funds dry up now, then London will be forced to wake up and send money. Unlike an aluminum factory, a town that has 93,000 inhabitants can’t just be closed down.

An agile senior named Steven played host on a recent evening to the true beneficiaries of the Brexit vote: members of the UK Independence Party (UKIP).

Four years ago, Steven took over the then-shuttered Seaton Hotel on the coast after a career that had taken the engineer to building sites in China, Egypt and Saudi Arabia. His hotel that evening was booked solid, as it always is when fuel rods have to be replaced in the nearby nuclear power plant and a large number of technicians need a cheap place to stay.

Nevertheless, Steven had reserved the hotel’s restaurant for a UKIP meeting. Even though his grandfather had voted Labour, the 67-year-old Steven has recently been supporting the right-wing populists.

The UKIP members have a dream for Hartlepool too – but not the one of a future as a tourist and creative paradise but rather of a return to the good old times with decent work for decent workers. Britain will now be able to decide its own fate, Steven says. The country can see to it that foreigners from E.U.-member states will finally no longer be taking over the good jobs in the factories. He says he had to give up his passport when he worked as an engineer in Saudi Arabia. He thinks that could be a model for the seasonal farm workers from Poland.

“Migratory birds also come in the summer from Africa. But they also go back there again,” Steven said.

It’s voters like Steven that Ms. May wants to win back. She interprets the Brexit vote as a call for a society that doesn’t just offer a chance for the privileged. But the Conservative Party leader will have a hard time in towns such as Hartlepool that have been left behind.

A huge amount of skepticism exists about the old elite, and that’s something UKIP is exploiting. The party gained 28 percent in Hartlepool in the 2015 national elections. The party has moved into the center of northern English society.

UKIP member Richard Elvin is the owner of a travel agency that has 10 employees. Mr. Elvin travels a lot in Europe, has lived for some time in Zurich, and speaks fluent German.

“I believe in Europe, but not in the E.U.,” he said.

Until recently, Mr. Elvin was head of UKIP in northeastern England. He is supporting younger party members – such as Jonathan Arnott, a 35-year-old local member of the European Parliament. Mr. Arnott wants to replace Nigel Farage, who has stepped down as head of UKIP.

Mr. Elvin plans to take advantage of the fact that the center of society is shifting towards the party. Hotel owners like Steven never used to make their rooms available to the party. “We were, after all, pariah,” Mr. Elvin said.

He has high hopes for UKIP. That it’ll make it possible for steel for the building of bridges in Hartlepool to come from the town’s own steel mills rather than Belgium. That energy will become so cheap that industry will flourish again. That penalty tariffs will be imposed on China. That fishermen sail again without the E.U. fishing quota. That the brakes will be put on immigration – not out of xenophobia, Mr. Elvin says, but simply because no more room is left, the streets are overcrowded, and social housing is scarce.

“Brexit must be Brexit. If they try to fool with us, we’ll make a stink,” he said.

Should Ms. May attempt to get around the results of the referendum, he adds, UKIP will become stronger than ever before and sweep her out of office.

The social climate in Hartlepool is changing. The first to feel it are people such as Beata. The young Polish woman was coming out of the only Polish supermarket in town with her daughter.

“The people here are just as xenophobic as in small towns in Poland,” she said.

Her previous neighbors used to hurl insults at the family almost daily, she says, and her husband constantly had problems with his boss. After the referendum, she says, one female neighbor actually asked when they were going back to Poland.

“My husband and I plan to move to London. There isn’t any good work anyway,” Beata said.

Well, it might get worse.

The British economy will suffer acutely from increased uncertainty as a result of the Brexit vote, according to a report presented in Berlin by the German Institute for Economic Research.

Due to the decision to leave the European Union, the British economy will grow by 0.3 percentage points less this year and 1.2 percentage points less in 2017 than it otherwise would have.

The United Kingdom is an important trading partner of European countries. Both Germany and the euro zone will be adversely affected, but according to the DIW’s model, not very strongly. Growth this year will be slowed down in both by only 0.1 percentage points. In the coming year, it is supposed to be a bit more, with a minus 0.3 point loss for the euro zone and a 0.4-point loss for Germany.

The DIW’s estimation of loss of growth for Germany largely corresponds with that of the International Monetary Fund, which presented its analysis two weeks ago.

The greatest problem for the British economy is the uncertainty about future production and sales conditions that are already resulting in investors halting or postponing projects. The trading partners are suffering from lower demand from the island.

 

Christoph Kapalschinski covers consumer goods, textiles and food for Handelsblatt. To contact the author: kapalschinski@handelsblatt.com

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