On March 9, 2017, Count Paul Buysse gave a keynote address on Brexit and the challenges and opportunities ahead for Belgium. Count Buysse is the Chair of the Federal Government’s High Level Group on Brexit. This working group surveyed the positions of employer associations, companies and many other economic stakeholders in Belgium. At this event, Count Buysse highlighted some parts of their report on Brexit and its impact on the Belgian economy.
On June 23, 2016, British voters chose to leave the European Union, and this week Brexit is becoming a reality with Prime Minister Theresa May triggering Article 50. With the UK leaving the European Union in two years time, the EU stands to lose the fifth largest economy in the world and will see its population decline by 12.76%. The EU will lose some of its international weight and will most likely have to revise or redistribute the EU budget as the UK will leave behind a 15% budget gap.
The Brexit negotiations will be challenging and will likely cause much institutional and economic uncertainty. There will be several big issues on the table: the future of trade relations between the UK and the EU – 55% of British exports go to the EU; the acquired rights of EU citizens living in the UK and of UK citizens in the EU; and the financial settlement – estimated by the Financial Times at €20 billion and by the European Commission as possibly amounting to €60 billion.
What does this mean for Belgium?
As trading partners, Belgium and the UK have mutual interests. The UK is Belgium’s fourth biggest export market and fifth largest supplier. Belgian exports to the UK are diversified: from transport equipment, pharmaceutical and chemical products to textiles and food. In short, Brexit will likely have a major impact on some of these sectors, especially food and textiles, because the UK market represents a significant share of their exports.
The challenge ahead for the Government is to safeguard the benefits political and economic European integration have brought to Belgium and to limit as much as possible the negative impact of Brexit on Belgian industry. One of the recommendations of the High Level Brexit Group is to have concrete support measures in place for those companies negatively affected and to help them cushion the blow. However, even in a post-Brexit world, the UK will remain an economically important neighbor, and it is vital for the Government to maintain and improve Belgium’s trade relations with the UK.
Finally, there will also be economic opportunities on the horizon for Belgium: there will be companies leaving the UK and the Belgian Government should work on attracting those companies to Belgium. The Government should work on several key points – labor costs, corporate taxation, mobility and country governance – to create a business-friendly environment and to help put Belgium on the map for companies looking to relocate.
Our 2017 Annual General Meeting and the event ‘Brexit: Challenges and Opportunities for Belgium’ were kindly hosted by AG Insurance.