Thursday , May 13 2021

The most exposed sectors in the EU of Brexit without consent

Automotive industry, agriculture, financial services. Several European Union (EU) sectors would be particularly affected in the event of a divorce between the United Kingdom and its 27 non-affiliated partners.

Without the "deal", it would lead to the introduction of barriers to trade with the reintroduction of customs duties and the unfavorable mutual recognition of environmental or health standards, for example.

The automotive industry is the sector where damage can be more important. Professionals warn several times about the possible catastrophic consequences in a sector that employs nearly 12.2 million people on the continent.

About 10% of European automotive exports go to the UK, says Vincent Vardard, an economist at the Center for Prospective and International Information Research (CEPII).

In addition, the UK and EU automotive industry is highly integrated. "Sometimes some auto parts cross the border between the UK and the continent five or six times," explains Carsten Brzeski of ING Diba. Any dysfunction in the supply chain, like switching customs, would hurt them.

Brutal divorce would affect particularly the German automotive industry, which is well established in the UK. "If our supply chain has to stop at the border, then we will not be able to continue to produce in the UK," said Stefan Fresimut of the German BMW.

At the same time, the chemical sector will also be affected. "Many German, French, Dutch or Belgian companies have production facilities" in the UK, says Blazski. That is why the production chain would be particularly affected.

In addition, multinational companies such as Shell's Anglo-Dutch Shell Group or English-American LyondellBasell in the Netherlands are also facing specific issues related to their management.

Agriculture and fisheries will also not be abandoned. At present, only 60% of British food needs are covered by own production and the rest is mainly imported from France, Belgium, the Netherlands and Ireland.
Upon reintroduction of customs duties, the goods will be more expensive and their entry into the UK may be delayed. "We can imagine that there are trucks blocked in Calais and that, while they wait, the milk they transport before they reach Dover," Brzezinski suggests.

The entry of many goods and animals may be prohibited unless it is registered in the United Kingdom on the list of authorized third parties. This registration can be done quickly, under conditions, for a former EU member.

Fishing can also be a problem for France, Spain, Portugal, Denmark or the Netherlands, whose fleets typically operate in British territorial waters.

The aviation industry will also be among those affected. Airbus, which manufactures its aircraft at different production points in the EU, has already sounded the alarm in the case of Brexit without consent.

The European group, which directly hires nearly 15,000 people in the United Kingdom to produce the wings of its devices, has already warned that a sharp departure from the bloc would be "catastrophic" and force it to question its investments in the country.

In July, Germany's Tom Enders, Airbus CEO, expressed concern over the United Kingdom's departure from the European Aviation Safety Agency (EASA). "As of next April, thousands of parts of our aircraft will no longer be valid, which could mean an interruption in our production," he said.

The fear of a sudden brake on air traffic between the UK and the continent makes it a particularly sensitive sector.
The European Commission wants to ensure that companies can fly over European territory and that security certificates remain valid for a limited period of time. This requires an agreement on the part of the United Kingdom.

On the other hand, financial services also seem to be paying attention to the events behind Brexit. Operators installed in the UK will lose their right (the "passport") to provide their services in the 27 bloc countries without attending.

The Commission has already noted that many operators have done the necessary to "correct their contracts and move" the activities of the continent.

On Friday, the governor of the Bank of France called for vigilance in the compensation sector to be maintained, as divorce without a deal could "pose a risk" to the stability of the financial system.

British companies have almost a monopoly in this activity, which is to keep bookkeeping between financial agents on world markets and to ensure the proper execution of transactions between all operators.

Source link