How Brexit is Affecting Economic Growth Among EU Countries
19 October 2017
Discussions about Brexit are intesifying and nobody exactly knows what it brings on the table of common citizens. Will Brexit influence positively the rest of the EU?
While financial experts have little optimism for the UK's economy, some are claiming it could be good for the rest of Europe. The global economy is recovering, with many countries seeing rapid growth and decrease in unemployment. The recent re-election of Angela Merkel is largely due to strong economic performance in Germany, with GDP growth at 2% and 2.5 million more people now employed. This is in contrast to recent EU stagnation, especially in older member states. So will Brexit provide a positive net for the rest of the EU?
The Bad News
The UK has a trade surplus of around £20bn (approximately €22.5bn), which significantly contributes to the EU's total GDP growth. Without a free trade deal, Europe's GDP is set to fall.
Then, there is the possibility of migration controls. The United Kingdom took in 1.2 million workers from eastern European countries in 2015, who may have otherwise struggled to find work. The UK was one of just three countries who did not restrict the flow of labour from countries such as Slovakia, who joined the EU in 2004. This is set to fall as the UK withdraws EU membership. However, this will likely benefit countries such as Germany who are looking to take on more foreign labour as their economy continues to grow.
The Good News
The global economy is growing and newer EU countries, which are benefiting the most. Small businesses should feel optimistic about their economic position and be willing to invest to stimulate growth. Whatever your business, you can always refer to helpful online resources, such as cbs-cbs.com that can help you get to the next level.
The UK is dependent upon products and services from Slovakia and other EU countries, especially when it comes to the motor industry. Peter Ziga, Slovak economy minister, is leading calls for a mutually beneficial free trade agreement with the UK.
The British government are rational actors who will ultimately come to an agreement that serves their economic interests. While they may wish to tighten immigration control from Eastern Europe, it is unlikely that the UK will limit imports from the region.
With companies planning to leave the UK, Slovakia has offered them the chance to invest in their country. The whole EU could be set to benefit from increased corporate investment as businesses choose to relocate their businesses outside of the UK.
The consequences of Brexit are yet to be seen, as negotiations continue on. However, there is little need for EU member states to be concerned, as economic performance looks generally strong and unemployment is increasing. For Slovakia and similar countries, this could present some interesting opportunities.