The consequences of Brexit on Europe’s exports will not be as serious as initially expected, according to French credit insurer Euler Hermes.
European exports are expected to fall by €10 billion rather than an initially estimated €18 billion, according to the company.
Such a drop would be equivalent to less than 0.5% of GDP. Meanwhile British exports are expected to fall by €27 billion, or 1.1% of GDP, as a result of lower demand, more paperwork and a fall in the pound sterling.
Customs checks on goods imported into the UK can be avoided in a six-month transition period, which will reduce the impact on the European side.
The situation is also cushioned by the coronavirus pandemic, as confinement leads to a slowdown in international trade and an increased use of local subcontractors.
“The coronavirus crisis gives the British government unique margin for maneuvering to deal with the negative consequences of Brexit,” Euler Hermes noted.
“Brexit or not, EU agreement or not, the UK would in any case have experienced a more pronounced recession in the first quarter of 2021 due to the pandemic and the new lockdown,” the credit insurer added.
With a €700 million loss in exports, however, Belgium will be among the EU countries who suffer the most under Brexit, after Germany (€2 billion), the Netherlands (€1.2 billion) and France (€900 million).
That said, the UK and the EU did manage to avoid having to trade under World Trade Organisation (WTO) rules, which would have seen the introduction of high tariffs and extensive customs checks, as they reached a Brexit deal just eight days before the UK left the EU's single market and customs union.
The Brussels Times