The Effects of Brexit On EU - With Special Reference To Spain
Although on January 31, 2020 it has gone down in history, the 'ordered' disconnection of the United Kingdom from the EU will bring few effective changes immediately. The date will mark the beginning of the negotiations to decide how the commercial relations between the British and Europeans will be in the future.
At the moment, a transition period is established until the end of 2020 in which the current terms for trade in goods and services, and for the movement of capital are maintained. Most experts do not trust that an agreement will be reached within the expected timeframe given the breadth and complexity of the matters that need to be addressed, so remember that until July 1 an extension of the transition period can be requested.
Therefore, the uncertainty about the commercial scenario that the European Union and the United Kingdom will be able to reach is maintained, with very important economic repercussions. Almost half, 45%, of the United Kingdom's exports go to the European Union, while 53% of the goods that the British receive come from what have been their partners so far.
The Impact On Spain
Brexit is bad for everyone, for the United Kingdom, for the European Union and for the world economy," advances the president of the Club of Spanish Exporters and Investors, Antonio Bonet. From this commercial association, it is recommended that Spanish companies maintain the contingency plans they have been developing, since in 2016 the British approved in a referendum to leave the European Union.
In the case of Spain, the Club foresees that Brexit has a negative impact since the United Kingdom is the fifth destination of export of goods (7% of exports). In 2019, with data until November, Spanish companies sold products worth 18.4 billion euros to the British market.
It is also the first destination of Spanish investment in the world , with more than 80,000 million euros. According to the Chamber of Commerce, more than 126,000 jobs are generated, especially in financial services and telecommunications.
Spanish companies have been evaluating the possible consequences of Brexit for their businesses for years and rehearsing plans to face the new scenario. The main companies with investments in the United Kingdom have already made some movements in recent months:
The European Commission has given Iberia a break by announcing that the air traffic regulation will be extended until October 24, 2020 as planned. Without this extension, the airline now integrated into the British IAG ran the risk of losing its flight rights within Europe.
It left its headquarters in Oxford, but believes that after the years of uncertainty will come a revival of infrastructure investment.
It has sold a offshore wind farm and has allocated that money to its Scottish subsidiary to strengthen its position in the country.
It has left the IPO of its British subsidiary O2 on the air, but last year it registered a 5.8% increase in revenue.They keep the United Kingdom as one of the areas where they will focus their growth efforts.
It plans contingency plans for the foreseeable deterioration of activity in the United Kingdom.13% of its profits are generated in this country.
The Great Tourist Client
The United Kingdom is the main issuer of tourists to Spain. It has remained so during 2019, the year in which it has remained at the head of international visitors, but in which there has been a decrease in arrivals in practically every month of the year. The last data, that of November, marks a 6.3% reduction compared to visits a year earlier.
The Minister of Industry, Commerce and Tourism, Reyes Maroto, recently said that the execution of Brexit could favor Spain since, by eliminating uncertainty, expectations for the tourism sector improved. Thus, he stressed that all autonomous communities show optimism in this regard by 2020. A very prominent aspect because the expenditure of English tourists in Spain is around 12.6 billion euros.
The Invoice For United Kingdom
Although the formal farewell is consummated this Friday, the United Kingdom continues to contribute during this year to the budget of the European Union as if it were a Member State. This way you will have to pay your share proportional to the European accounts and programs. It is estimated that the invoice for the country will be around 45,000 million euros. On the other hand, the Bank of England will receive the capital that had been delivered to the European Central Bank.