“A sad Brexiter”. It is as well as Dominique Strauss-Kahn, is defined in a column published in the Echoes. For the ex-director general of the international monetary Fund (IMF), the british people is to be in the right in wishing to separate themselves from the european Union. The question is no longer there, he argues: “if a second referendum is not an option, then it is necessary to separate, and it is necessary to separate quickly,” writes the boss of Bercy under Lionel Jospin, who adds that “it is necessary that the Brexit takes place quickly regardless of the cost”, so that the european Union “continue its path” and that the uncertainties surrounding the exit of the United Kingdom are dissipated more quickly. “Of course, the “hard Brexit” will be costly for the Union, and it will be much more to the British. But this cost is nothing compared to the procrastination that we see for the draw”, considers he.
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It must be said that the repeated delays and indecisiveness of the elected British were eventually irritate the business community. In fact, for a company, nothing is more damaging than the inability to foresee its future, at least in the short or medium term. However, to this day, no one knows if the Brexit will indeed take place, on the one hand, and in what form, on the other hand. The european operations located in the United Kingdom, or trading with the old Albion are in an awkward position, having to prepare scenarios of ever more complex and unexpected.
The announcement of the additional period granted to London, this week, has been greeted ambiguously by the current president of the IMF, Christine Lagarde: if the report “puts an end to the risk of “Brexit” no agreement” on April 12, and gives additional time to the parties to negotiate, “it is obvious that this prolongs the uncertainty and that this does not solve problems”, she commented.
uncertainty expensive and durable
on The contrary, even in the short term, uncertainty has a cost, heavier and heavier as the weeks go by. “The uncertainty is costly, in particular for SMES, which must identify the british traders in their supply chain or distribution in the United Kingdom, and then prepare for the different formalities to be put in place depending on each possible scenario of the Brexit”, explains the head of european affairs at the Chamber of commerce and industry Paris Île-de-France, Bernard Cottin. Businesses need to make a diagnosis of their links with the Uk, analysing their options and think about the solutions to adapt to the different scenarios of separation. Long, delicate, complex… and expensive, particularly for small structures, of limited means.
The uncertainty also leads to a decline in investment, loss of consumer confidence as business leaders, a degradation of uk imports and contributes to the slowdown in economic activity observed in Europe. Euler Hermes considers that it will cost 0.3 points of GDP growth per year in the United Kingdom, and 0.1 percentage point in France. “This uncertainty is already having an impact, and the longer it lasts, the more this impact will be negative on the british economy but also european”, stated a few days ago, the senior economist in charge of Europe at Euler Hermes, Ana Boata.
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In addition, on the long term, the consequences of the uncertainty have not finished to make itself felt at the european level. “The result of the referendum was a shock, and the good health of the british economy up here has helped to soothe concerns”, analysis and the chief economist of Goldman Sachs in Paris, Alain Durré. However, signs show a “downward trend” in business investment-a trend that has only strengthened in recent months. “Household consumption has shown good growth figures, but it may be the tree that hides the forest”, warns the expert, which points to a sharp decline in investment, particularly in the first quarter of 2019. A concern that confirms Ana Boata: “business investment contracted over the entire year 2018, and this will have impacts for the uk growth and european medium-term”, predicts the expert.
“France is still exposed, but less so than other countries, such as Germany, the netherlands, Ireland or Belgium,” says, however, Ana Boata. “Other countries are much more worried about us, and have prepared earlier”, confirms Bernard Cottin. A note from a research team of Goldman Sachs highlights a similar conclusion: “the confidence shock to the global has had the most impact in Italy and Spain”, and “Japan, the United States and Canada”. Less dependent on the british market, the Hexagon has been – relatively – unscathed.
The fear of the no-deal
If they agree on the negative aspect of this uncertainty, the experts seem, however, to regard unlike Dominique Strauss-Kahn, that “Brexit” fast and without agreement would be the worst possible solution for all stakeholders. Finally, it is better to stay in uncertainty for several months, if it may lead to a final agreement. Feared by the business community, the “no-deal” complexifierait in effect significantly the economic relations with the United Kingdom. “A no-deal would be much more negative than to remain in uncertainty,” explains Bernard Cottin. In addition, “the abandoning pure and simple of the uk market is not an option” for companies, recalls Bernard Cottin: “whatever happens, the uk market will remain important for our business. It is a stable, financially solvent, and one of the only countries with which France has a trade surplus”.
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A quick break organized to combat the uncertainty would also have strong political implications, and would induce His majesty’s subjects to other international powers, such as China or the United States. “Brexit without agreement would pave the way for a greater chinese presence in the country, in the framework of the new silk roads. Beijing expects it,” says soberly an expert. A risk policy that also stresses the UN, and that explains the willingness of Berlin to arrive cost-that-costs to an agreement to keep the United Kingdom in the sphere of influence of the european Union.
Delay in the ignition
Nearly three years after the referendum of June 2016, the French companies are they protected in the face of uncertainty? Nothing is less sure. “In the United Kingdom, an indicator ofe the Bank of England exists, and shows that a little over half of the companies are considered to be ready.” A survey that has no equivalent in France, where “the public sector says to be ready, but the private less”, considers Ana Boata. Starting from the principle that part of the output of the United Kingdom would be clarified quickly, the French private sector remained in a posture to wait and see rather than preparing immediately for the Brexit.
Since then, the services of the State as well as the companies and the federations are enabled to become aware of the urgency of the situation. “The basic scenario in which to leave the business is that an agreement similar to the one that Theresa May will be signed,” stresses Alain Durré. Today, Goldman Sachs considers that “Brexit” no agreement has only a 10% chance of occurring, compared to 50% for an output frame, according to a note from the bank. In parallel, a second referendum on any agreement of output implies a significant probability (40%) do not result in any Brexit”, according to experts of the institution.
