Potential investors could turn their back on UK after Brexit
BRITAIN’S exit from the EU would be difficult but not catastrophic – although it could leave the country’s economy struggling as a result of a seriously weakened pound, Birmingham’s business community has been told.
Foreign exchange strategist Oliver Harvey, of Deutsche Bank , told an audience at a Greater Birmingham Chambers of Commerce think-tank that UK trade would be hit and multi-national corporations could turn their back on potential investment plans in the short to mid-term.
However, he said one factor was that the weakened pouind could make British goods more competitive on the export front.
Mr Harvey told the event, held at the Birmingham office of law firm Pinsent Masons: “You would see a much, much weaker currency if you get a Brexit. The short-term impact on the UK could be significant, not catastrophic, but the balancing item is a much, much weaker currency.
“The UK has the largest current account deficit in the developed world, larger than Russia and South Africa. We run a massive current account deficit with the EU – we import more than we export from the EU.
“In the very short term there is a growth impact, further down the line it is more difficult (to predict).”
Guy Lougher, head of the EU and Competitive Law Group at Pinsent Masons, said there was a real likelihood that if the UK left the EU then there could be a change in Prime Minister, with Boris Johnson a possible incumbent at 10 Downing Street.
“If there is a change there would have to be a Eurosceptic in charge of the Conservative Party,” he said.
Mr Lougher forecast lengthy uncertainty following a vote to leave, claiming there were no existing models for how the picture could look.
“We simply don’t know what could be negotiated at this stage and the trade barriers and tariffs that may need to be introduced,” he said.
“What we do know is that it will be a lengthy process. The UK Government has to notify the European Council of its intention to leave which will trigger a two-year negotiation window. When this would be triggered in the event of a ‘leave’ vote on June 23 is unclear, but based on other recent EU trade deals, achieving the agreements we need to in two years would be extremely challenging and unlikely.”
“In 2017 there are elections in France and Germany and the suggestion is that political grandstanding would not be conducive to negotiating the terms of an exit.”
“There is going to be a lot of uncertainty because the renegotiating process could easily take five to 10 years,” he added.
