Brexit is posing a large number of questions especially relative to the effects that it may have on the economic and trade relationship with the EU27. There is no easy answer. Looking at the existing situation may certainly provide an indication of the losses that will be begrudged by both the EU27 and the UK, but the actual outcome will depend very much on the specific negotiated agreement which nowhere near concluded. It is not difficult to predict, however, that the inevitable losses that will accompany Brexit will be more concentrated on the UK and that it will be generally more dispersed for EU countries with the exception of neighbor countries like Ireland, Belgium, and The Netherlands, whose economic ties with the UK are particularly deep. The negotiations will certainly be affected by the awareness of who is going to lose more in case no agreement is reached. Thus rendering UK PM May’s bold statement that ‘No deal is better than a bad deal’ an empty threat). Albeit others, three additional elements should be considered. First, the actual amount of the so-called “Brexit bill”, namely the outstanding payments that remains to be paid by the UK to the EU. Currently it is estimated that the UK would shoulder euro 100 billion worth of EU liabilities, but net payments would bring this to approximately euro 50 billion. Ironically the higher the UK bill, the stronger its negotiating position with the EU. Second, is the possible successful pivot by the UK to rely on different economic partners other than the EU (i.e. the US, the Commonwealth (India), China, etc), so as to compensate as much as possible the trade diversion resulting from Brexit. This is now increasingly unlikely as a new transatlantic deal with it most important non EU trade partner the US is increasingly unlikely. Third, the large presence of European citizens in the UK could significantly impact the UK and EU27 agreement. In the end, both the UK and the EU, cannot ignore that the losses they would incur in the case of a MFN type of separation. What is clear is that the time of emotional and populist decisions needs to be overcome and replaced by the reciprocal interest to preserve the prevailing strong economic and trade ties.
The impact of Brexit on EU27 on trade, investments and financial services
Della Posta PompeoCo-primo
;
2018-01-01
Abstract
Brexit is posing a large number of questions especially relative to the effects that it may have on the economic and trade relationship with the EU27. There is no easy answer. Looking at the existing situation may certainly provide an indication of the losses that will be begrudged by both the EU27 and the UK, but the actual outcome will depend very much on the specific negotiated agreement which nowhere near concluded. It is not difficult to predict, however, that the inevitable losses that will accompany Brexit will be more concentrated on the UK and that it will be generally more dispersed for EU countries with the exception of neighbor countries like Ireland, Belgium, and The Netherlands, whose economic ties with the UK are particularly deep. The negotiations will certainly be affected by the awareness of who is going to lose more in case no agreement is reached. Thus rendering UK PM May’s bold statement that ‘No deal is better than a bad deal’ an empty threat). Albeit others, three additional elements should be considered. First, the actual amount of the so-called “Brexit bill”, namely the outstanding payments that remains to be paid by the UK to the EU. Currently it is estimated that the UK would shoulder euro 100 billion worth of EU liabilities, but net payments would bring this to approximately euro 50 billion. Ironically the higher the UK bill, the stronger its negotiating position with the EU. Second, is the possible successful pivot by the UK to rely on different economic partners other than the EU (i.e. the US, the Commonwealth (India), China, etc), so as to compensate as much as possible the trade diversion resulting from Brexit. This is now increasingly unlikely as a new transatlantic deal with it most important non EU trade partner the US is increasingly unlikely. Third, the large presence of European citizens in the UK could significantly impact the UK and EU27 agreement. In the end, both the UK and the EU, cannot ignore that the losses they would incur in the case of a MFN type of separation. What is clear is that the time of emotional and populist decisions needs to be overcome and replaced by the reciprocal interest to preserve the prevailing strong economic and trade ties.File | Dimensione | Formato | |
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