Due to the country’s geographical proximity, the UK is one of Belgium’s most important trading partners. 3,2% of Belgium’s value added (goods and services combined) is generated by the UK’s total final demand, with the UK being Belgium’s fourth largest export destination for goods. However, the bilateral trade relationship is starkly imbalanced, as Belgium has a trade surplus in goods of €14,3 billion vis-à-vis the UK. This paper shows that this strong intertwinement leaves Belgium vulnerable to the negative economic impact of the UK’s leave vote, something already made visible by the depreciation of the Pound Sterling. While one can only hope for an as deep as possible EU-UK economic integration to be negotiated after Brexit, it is of the utmost importance for businesses and certainly SMEs, which are very important for the Belgian economy, to prepare for all scenarios, including a ‘cliff-edge’, leading to BE-UK trade under WTO-rules.
Brexit is an important event for countries like Belgium which are heavily exposed to the UK’s economy. As talks on a Withdrawal Agreement and a future relationship between the UK Government and the European Commission’s Brexit Task Force are ongoing, this paper provides an assessment of 5 possible scenarios for Brexit: a no-deal leading to ‘cliff-edge’ chaos and a future relationship based on WTO commitments, an extension of the art.50 negotiation period, an extension of the transition period, a comprehensive EU-UK free trade agreement, and the UK’s ‘White Paper’ proposal. We show that for an orderly divorce with continued intense economic relations, one or both parties must move away from their ‘red lines’. The outcome of the negotiations is therefore impossible to predict at the moment, also because sound economic reasoning is falling victim to politics and these are most volatile in the UK. We conclude with an overview of the impact of the Brexit scenarios discussed on parties’ principles.
With less than six months until the UK leaves the European Union, businesses across Europe face significant political and regulatory uncertainty. Brexit is unprecedented in its scale and complexity and creates uncertainty for all sectors of the economy, but particularly for firms which have a large share of cross-border business including wholesale banks. This article focuses on the practical challenges which wholesale banks face in their preparations for 29 March 2019. To ensure an orderly withdrawal process and provide additional time for businesses to adapt, a transition period to the end of 2020 remains critical. It is important that an agreement on the Withdrawal Agreement is reached as soon as possible to provide certainty of the transition period. In the absence of certainty that there will be a transition period, firms are implementing their contingency plans to ensure that they can continue to service their clients and a number of operational and practical challenges remain. These include significant risks that urgently require policymakers and regulators to work with the industry on solutions. Given the extremely tight timescales, these issues have to be addressed as a matter of urgency by policymakers and regulators to ensure an orderly withdrawal which minimises disruption to clients and consumers and safeguards financial stability across Europe.