A rather worrying report surfaced this week from KPMG suggesting that Ireland, Cyprus, Malta and Luxembourg were going to be the hardest hit by Brexit. Quite apart from the suggestion of the headline that all of these countries would be hit equally, I found the report to be fundamentally flawed.
Key to the analysis is the suggestion that relationships between these countries and the UK would be in decline post-Brexit. This is nonsense. It misses so much of what is actually going on right now on the ground in these countries it comes across as nothing more than desk research. Perhaps the reporter should spend some time with the decision making bodies in these countries and really see what is going on.
As I have had extensive dealings with Malta over recent months and years I can state categorically that there is no ‚Äòdeterioration‚Äô of the relationship between them and the UK. In fact, the opposite is true as more and more UK based companies look to countries like Malta to provide a solution to their passporting dilemma post-Brexit.
For any UK based firms that are looking to secure EU passporting rights for their financial transactions post-Brexit then my consultancy Striding Edge is currently providing invaluable support and direction to a number of business and financial institutions facing this issue.
And trust me when I say that Malta is more than happy to talk to the UK and relationships have never been better.
I‚Äôm including a transcript of the original article below for you to make your own mind up. If anyone wants to talk to me about this I‚Äôll be more than happy to present a compelling case for Malta being our friends post-Brexit, not our enemies.
The following article appears on CNBC news on 1st March 2107
Ireland, Cyprus, Malta and Luxembourg to be hardest hit by Brexit: KPMG report
The Republic of Ireland, Cyprus, Malta and Luxembourg look set to be the biggest losers from a deterioration in relations between the U.K. and the European Union post-Brexit, according to new research from KPMG.
In a departure from Anglo-centric analysis of the economic implications of Brexit on Britain, KPMG’s chief economist Yael Selfin has said that these smaller economies ‚Äì countries with which the U.K. has a large trade surplus ‚Äì will have the greatest interest in securing a good deal when negotiations are scheduled to get underway at the end of this month.
Ireland, Cyprus and Malta are major net importers of U.K. goods, but are almost insignificant in U.K. imports, according to the Centre for Economic Policy Research.
Meanwhile, the U.K. is one of the largest export markets for both Ireland and Luxembourg, accounting for 14.1 percent and 10.1 percent of Gross Domestic Product (GDP) respectively.
Larger economies, such as Germany and France, have significantly less to lose from the possible implementation of trade tariffs on the U.K. – U.K. imports account for closer to 3.5 percent and 2.1 percent of German and French GDP respectively. However, restrictions on the labour force could have wider reaching impacts, according to the report.
The largest number of British citizens can be found in Spain (over 300,000), Ireland (250,000), France (over 185,000) and Germany (over 100,000), based on UN 2015 data estimates.
While a departure of EU workers from the U.K. labour market could prove a positive for the domestic economies of these countries, with more people potentially returning home to work; those countries which are dependent on U.K. workers or remittances from the U.K. could be harder hit, says Selfin.
“Remittances from emigrants can make a significant contribution towards national income. Latvia, Croatia, Hungary and Lithuania are the most reliant on remittances in the EU, all with over 3 percent of GDP coming from abroad.”
Amongst the countries to be least affected by the U.K.’s departure from the EU include Bulgaria, Finland, Italy, Romania, Slovenia and Sweden, whose economies are less dependent on Britain, according to Selfin’s analysis.
“For many countries, one of the most important factors to influence the impact from Brexit will be the goods and services they export to the UK. The effect on domestic economies of migration may be ambiguous,” noted Selfin in the report.
“For many Eastern European countries, protecting the workers in and remittances from the UK may be the most important priority, and countries such as Luxembourg, Malta and Cyprus rely on British workers.
“Spain, however, may be glad to stem the flow of British pensioners to the economy, whilst Germany may be glad to see greater immigration from Eastern Europe and to repatriate some of its own workforce.”