What is at stake for the EU economies after Brexit?
We examine potential pitfalls and dangers facing business, and the EU itself, on separating UK from the trading bloc.
The Brexit battle lines are being drawn. European leaders are due to meet at the end of April, when they will lay out their strategy for talks with the UK, following Prime Minister Theresa May‘s formal notification on the British departure from the European Union.
A deal is expected to be reached by March 2019. In 2014, 45 percent of all UK exports,or $284bn worth of goods, went to the EU . After Germany, the UK is the trading bloc’s second largest economy, and it imports over $360bn worth of goods from its fellow EU members.
In 2015, the UK contributed over $16bn to the EU budget and received about $7.4bn back in aid and subsidies from Brussels.
Fredrik Erixon, director of the Brussels-based European Centre for International Political Economy, examines the stakes.
On the European Commission’s preparation for Brexit, Erixon says: “Key member states want to start with the ‘divorce bill’ to try to get a settlement with the UK about how much the UK should contribute to the EU’s budget after it has left.”
This includes dealing with pension costs for civil servants in the European Commission and European Parliament and residency rights for Europeans living in UK and Brits living in Europe. After these issues are dealt with, “then the EU Commission would start to negotiate a new future trade agreement that’s going to substitute the trading arrangement that now exists”, he says.
Erixon debunks speculation that after Brexit all major banks would leave the UK and base operations elsewhere in order to retain their passporting rights and access to the single market.
Passporting is the exercise of the right for a firm registered in the European Economic Area (EEA) to do business in any other EEA state without needing further authorisation in each country.
Commenting on the UK airline industry’s concerns that it could find itself out of the EU Open Skies deal if Britain is taken out of the European Courts of Justice, Erixon says: “I’m sure they’ll be an agreement at the end of the day – but it’ll be technically complicated.”
He adds: “This is one of the issues where everyone involved are almost dead set on finding an arrangement which is going to avoid significant disruption for airlines, passengers, or anyone else involved in this particular business.
“It’s also one of these issues which shows how deeply embedded into the European Union the UK is and how many issues they need to disentangle themselves from in order to find a good arrangement for the UK once they have left.”
Also on this episode of Counting the Cost:
Brazil meat scandal: As bans of Brazil‘s meat exports sweep across the globe, we look at whether the world is about to face a shortage in supplies, and how the scandal could affect future trade deals.
Brazil’s position as the world’s largest exporter of poultry and beef is now under threat following bans by the European Union, China and others, after it emerged bribes were paid to Brazilian officials to pass off spoiled and contaminated meat as suitable for sale on the global market.
Carlos Caicedo, a senior principal analyst of Latin America with IHSMarkit, discusses the possible implications on prices and food supplies, as well as on trade.
The space economy: Potential profits are fuelling a new space race. SpaceX is one of a number of private companies that are pushing extra-terrestrial boundaries, as they strive to make human engagement beyond Earth more commercially viable.
The US rocket company has had some success. It recently celebrated the return of its Dragon craft from the International Space Station. This coincides with US President Donald Trump‘s signing of a new bill that promises more funding for exploration. It also encourages NASA, the US space agency, to transition more of its activities to the commercial sector.
Stuart Martin, the CEO of Satellite Applications Catapult, talks about the race to make money in space.
Mongolia’s wild camels: In Mongolia‘s Gobi Desert, wild camels have been a feature of life for millennia. They are an essential companion to man in some of the world’s most inhospitable places. But as Pearly Jacob reports, their future is uncertain.