Britain’s withdrawal from the European Union, Brexit, will cost French businesses some four billion euros a year, according to a study published on Wednesday by the Oliver Wyman cabinet in collaboration with Clifford Chance. The worst affected sectors will be the food industry, auto industry and consumer goods.
The study, which is based on discussions with business leaders and academic research, found that France would be the third most affected country in the EU after Germany and the Netherlands, with an annual loss of about four billion euros.
The sector worst affected by Brexit will be food and agriculture, with direct losses estimated at 900 million euros, especially wines and other types of alcohol, dairy products and cereals, stressed the study’s authors, who expect a hard Brexit that is “realistic and plausible”.
In 2016, France exported 38 billion euros in goods and services to the United Kingdom, mostly food products and consumer goods, while it imported about 32 billion euros, mainly financial and professional services, according to the study.
Businesses have varying degrees of resilience to Brexit. Small and medium-sized companies have fewer resources to manage the additional red tape and generally have less experience in exporting outside the EU, the study noted. They thus have less experience in battling with customs barriers and regulations.
However, while both EU and British SMEs are particularly exposed, many French exporting SMEs have the advantage of already exporting outside the EU, the researchers said.
The report urged French authorities to support SMEs, noting that they were particularly vulnerable and that their shortcomings would not only have a direct impact on the France’s economy, but would also have indirect consequences on the supply chains of the biggest companies.
The United Kingdom is scheduled to withdraw from the EU in March 2019 while remaining in the customs union during a transition period that will run until late 2020 to enable the establishment of a new partnership.