Brexit: the most exposed sectors
The economic impact among sectors
Published by Marzia Moccia. .Europe News from the world
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Regardless the scenario after the British parliament vote, Britain's exit from the European Union is scheduled for March 2019. According to International Monetary Fund estimates, the economic costs caused by the exit from the EU will be unevenly weighed both on the different industrial sectors and on the different regions.
Europe is indeed the main trading partner of the United Kingdom, and the future restrictions on the free movement of goods, services and labor force, will entail significant costs for the British economy. For instance, over 56% of cars produced in the United Kingdom are exported to the European market and about ¼ of the British financial services are provided to European citizens.
According to estimates, under any scenario, leaving the EU will result in an increase of existing tariff barriers, a reduction in migration flows and a restriction of foreign capital flows for the majority of economic sectors in the UK. Compared to the event of a "no-Brexit", in case of agreement the British GDP is estimated to experience a reduction between 2.5 and 4 percentage points in the long term, equal to a cost between 900£ and 1300£ per capita. While, in case of no deal, the GDP contraction could be between 5 and 8 percentage points over the long term, about 1700£-2700£ per capita.
In case of agreement with the European institutions in line with the political declaration signed in November 2018, the sectors exposed the most to the Brexit consequences are the most integrated in the value chains with the EU, such as the chemical and vehicles' component ones. These two sectors, in fact, are strongly integrated into the European value chain, and the respective supply chains could be significantly penalized by potential tariff increases.
Moreover, the effects will be significantly pronounced for some services, such as the financial ones, for which the loss of profits is estimated to be close to 15%, given the high number of European customers.
In general, Brexit could inaugurate a prolonged period of higher structural unemployment, since the reallocation of workers will be slow and gradual. Making credit accessibility to entrepreneurs easier would allow people to respond flexibly to the new economic reality and increase their productivity.