Spain – United Kingdom
The notification sent by the UK Government to the European Council on March 29 outlining its
The intention to leave the EU started the two-year countdown, under Article 50.
In a report titled “The Taming of Brexit,” published on March 29, we indicated that a withdrawal agreement from the EU could be reached and ratified by spring 2019. The report suggests an 80% probability that the parties will agree on a transitional arrangement to govern future relations between the EU and the UK. Such interim arrangements could bridge the gap between the EU withdrawal agreement and a final Free Trade Agreement (FTA). It is expected that during the transition period, the British economy will hold up in a scenario marked by a modest depreciation of the pound sterling (below 3%). The final agreement could be signed in 2021 in the form of a limited FTA (55%), under which certain sectors would be exempt from customs duties while others could be subject to tariffs. The forecast indicates that in 2021, UK GDP growth will reach 0,3%. Although still possible, a no-deal Brexit is highly unlikely (20% probability). Such an outcome would result from the absence of a transition agreement in 2019 or from a final outcome similar to that of the World Trade Organization in 2021. In both cases, the disruption of trade flows would have a significant negative impact on both the UK and the EU. In such an extreme scenario, GDP would fall by 1,2% in 2019, and the UK would remain in recession until 2021.
Source: Solunion
Weekly Export Risk Outlook – Euler hermes
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