According to research by the Office for National Statistics (ONS), 38% of the firms have reported an increased possibility of collapsing into insolvency in 2021.
And with time running out to finalise a divorce deal between the EU and the UK by the December 31 deadline, fears are rising that even a late agreement may not be able to spare companies from harm – putting jobs at risk.
“There will be an impact regardless of whether there is a deal, because of the non-tariff barriers,” said Rory Sherwood-Parkin, senior economic policy manager at South Tyneside Council.
“There’s likely to be issues around increased paperwork, rising costs, potential delays at UK ports and other bureaucracy, which is likely to have knock on effects for importers and exporters.
“With or without a deal there’s likely to be an impact.”
Sherwood-Parkin was speaking at a meeting of the North East Combined Authority’s (NECA) Overview and Scrutiny Committee, which was held by videolink and broadcast via YouTube as part of social-distancing measures.
The latest findings by accountancy giant EY have suggested the North East could suffer a 12% fall in its GVA, a measure of economic productivity, in 2020.
And the combined effects of Brexit and the Covid-19 pandemic could mean the region does not return to pre-pandemic levels of growth until 2023.
Uncertainty also remains around the planned UK Shared Prosperity Fund, the Government scheme intended to replace the European Structural Investment Fund (ESIF) after Brexit.
It is estimated that between 2014-2020 the ESIF will have been worth £437million to the North East.
“It’s four and a half years since the referendum and we were told certain things about how smooth it would be and it hasn’t turned out that way,” said Malcolm Clarke, of Durham County Council.
“We need to know where we stand, there’s a vacuum of information that just gets filled with rhetoric and people saying it’s fine.
“Then if you say it’s not [going to be fine], you get called a remoaner.”