16 January 2020 - 16:00
What’s Brexit got to do with us?
Perspectives and effects of UK’s withdrawal from the European Union
The now widespread slogan that “Brexit is a British problem” is most likely an ineffective way of dealing with the issue of the UK’s exit from the EU, but it certainly seems to capture the essence of the problem. Europe has now become a highly integrated political and economic area, though it is impossible to imagine dismantling the over 20 thousand existing EU regulations (94% of which also involve the United Kingdom) without there being any collateral damage or repercussions on the entire area of Europe remaining in the EU, especially in terms of revisions and renegotiations between the 27 partners that remain (and for which all signs point to them remaining). However, these are not crucial factors for the future of a united Europe. From the beginning, the United Kingdom’s participation in the European Union has been quite ambiguous, even a bit recalcitrant, primarily motivated by that traditional, peculiar isolationist form of “sovereignty” consisting of the Brits’ feeling of cultural and political otherness and, last but not least, also the fact that London is one of the leading financial centres in the world. This reluctance was clearly expressed in the tenacious grip on the pound sterling and frequently demonstrated also in terms of EU policy decisions: in EU Commissions, representatives of the United Kingdom often expressed opinions and voted in apparent contrast with those of the large majority of the countries in the euro area, in order to directly or indirectly defend the financial market of the City. From this point of view, even though the EU certainly cannot happily say goodbye to such an important member as the United Kingdom, we can legitimately hope that the EU’s process of creating common, shared policies will be somewhat simplified by the exit of a member that in all these years has seemed to exclusively further its own cause. It is also true that the British malaise that led to the Brexit has placed a spotlight on doubts and resistance that are not exclusive to the UK which, primarily structured as sovereignist ideologies, which have spread through many countries of Europe over the last decade: this demonstrates that there is something certainly inadequate (or even wrong) in the way that the EU’s governance works. It is particularly important to analyse and investigate the fact that so far, the European Union has not managed to offer its citizens effective tools for participation, and often it has tended to conceal, instead of resolving, conflicts between Member States: debtors and creditors, exporters and importers in and outside the euro area. Even with these insufficiencies, it is however clear that in the current globalised world, the existence of the European Union has strengthened its member states, creating a vast economic and social market that profoundly unites and reinforces its member states, intertwining productions, capabilities, technical and scientific creativity and, in the final analysis, their destinies, it being clear that a European country would not be capable of competing, by itself, in economic, technological and social areas with giants such as the USA, China, India or Russia.
Numerous quantitative analyses have been conducted on the economic effects that the now confirmed Brexit will produce. Limiting the analysis only to the trend data that is considered the most significant, it is worth noting the estimates of the Bank of England, which sets the drop in the GDP of the United Kingdom at up to 5 points if a no-deal Brexit occurs, with the loss of over 500 thousand jobs, even though several negative effects that could be caused to employment in the rest of Europe in the event of no deal cannot be ignored. However, this likelihood seems to be decreasing, also due to the recent landslide victory of the Conservatives). However, there could also be winners in a no-deal Brexit: according to a study of the United Nations Conference on Trade and Development, with the exit of the United Kingdom from the EU, the USA would increase its exports to that country by over USD 5 billion, while China’s exports would exceed USD 10 billion. These would be the losses that would hit the remaining EU countries in the event of a no-deal Brexit (which now seems highly remote), whose global exports would fall by about 10% of the total. However, these could be offset by massive moves of companies to the continent, which has been happening for a year now: according to the Bank of England, these are 60 thousand UK companies that have trade relations almost exclusively with the rest of the EU countries. Around 60% of these have moved or are moving their registered offices to a EU country. The estimates stated by Katholieke Universiteit of Leuven (H. Vandenbussche, Brexit Impact Study 2019) are based on a model that considers the input-output tables of 15 sectors, and, in the case of a Brexit deal, a negative impact of around 0.38% on the total GDP of the EU 27 (-1.2% for the United Kingdom), with a total loss of 280 thousand jobs in all the 27 EU countries (-140 thousand in the UK).
With regard to the insurance sector, IVASS notes that there are 53 companies in the United Kingdom (of which 47 in the “non-life” business) that insure around 9.7 million Italians, for a total of annual premiums of around € 1.7 billion. In the event of a no-deal Brexit, as these companies no longer belong to the EU, they would be unable to conduct insurance business in all the members states, and would therefore be forced to set up a permanent establishment in a member state and apply for all the authorisations necessary to operate in the EU. To overcome this obstacle, numerous British insurance companies have opened registered offices mainly in Luxembourg, Belgium and Ireland and operational offices in the various countries of the European Union.