Today the Podcast Podcast Economy

How the Brexit poison undermines the economy of the United Kingdom and its neighbors

Europeans are still waiting for an agreement on Brexit. The final negotiations must continue this Wednesday morning, October 16, because nobody wants to leave the United Kingdom without agreement. The worst solution on the economic level.

For the British as for their neighbors, this is actually the worst scenario. In this case, cross-border trade in goods could be halved the next day on the first of November, for want of sufficient administrative preparation, and it would take a year to find a normal flow warning the British court of accounts.

Ireland has already provisioned a billion euros to deal with what is considered in the country of clover as an economic disaster, which could cost him almost a point of growth in 2020. On the continent fears are growing. " After the Brexit, Britain will be" a new competitor "at the door of the EU warned yesterday the German Chancellor. In France, senators are worried about the risk of " tax and social dumping " in case of hard Brexit. Getting out of the European rules to be more competitive is one of the driving forces of the business community in favor of leaving the union, a club it is true very sparse, because the vast majority of British business leaders fear this deadline, which has already cost them dearly, in preparation and potentially lost activity.

The British economy is already penalized by the prospect of Brexit?

In three years the British economy would have lost 70 billion pounds, or 80 billion euros according to the latest assessment by the think tank Center for European Reform. Its GDP shrank by 2.9%. The most tangible sign of this contraction is foreign investment, which is marking time. Last year, 15% of companies suspended plans to invest in the United Kingdom according to an investigation by Ernst and Young. Since the beginning of this year, there is almost no more a penny invested in the automobile, a branch that has developed mainly thanks to foreign brands. Another symptom of this slowdown is unemployment, which has reappeared after nine years of steady improvement in the job market.

For European neighbors, are the effects of Brexit already sensitive?

Here too, the preparations burden state budgets, communities and businesses with the immediate neighbors of the United Kingdom. Ireland, France, the Netherlands, Belgium. That said in the Netherlands, Brexit is for the moment the happiness of the logistics sector. Demand from companies reviewing their supply chain with a Dutch base has increased fivefold in recent months. But this effect will be temporary, in the medium term the Netherlands are among the countries that have much to lose in Brexit, given the dynamics of their trade with the United Kingdom. For French senators, after Ireland France will be the big loser.

But we must keep in mind that the first economic victims of Brexit are those who chose it: on average, the British will suffer losses four times greater than those of European Union nationals.

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