Brexit: What does it mean for Europe?

5/18/2016 - Report
ic_blogtagTradeUnited StatesBelgiumFranceGermanyIrelandUnited KingdomBrexitEurozoneExportsTrade
In a soft leave scenario, UK real GDP growth could be cut by -2.8pp between 2017 and 2019 and 1,500 additional bankruptcies are expected. In a hard leave scenario, the cumulated impact would be -4.3pp of real GDP growth and 1,700 insolvencies. The peak is expected in 2019. Brexit fears are nonetheless already affecting the UK: -GBP34bn in portfolio outflows.

For the eurozone, real GDP growth could fall by -0.4pp by 2019 in a soft leave scenario, where a Free Trade Agreement is in place. Cumulated export losses would be EUR17.4bn for goods and services, EUR18.2bn for Foreign Direct Investments (FDIs) i.e. 1.9% of total and +1.0pp in business insolvencies growth.

In a hard leave scenario, the impact will be higher: -0.6pp of real GDP growth, EUR23.5bn for exports (i.e. 0.5% of total), EUR29.7bn for FDIs (i.e. 3.1% of total) and +1.5pp in business insolvencies growth. The Netherlands, Ireland, and Belgium would be the most affected through their exports and cross-investment positions. Germany, France, and the United States would also see a significant impact.

Biggest losses will be concentrated in sectors such as financial services, automotive, machinery and equipment, chemicals and agri-food.

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Brexit: What does it mean for Europe? - Report