Tomorrow on June 23 UK citizens will be called to the polls to decide in a referendum on whether their country should leave the European Union or not. Brexit and its possible consequences have shaken British and European politics and have raised concerns in the economic field.
There is no fear among the institutions and companies but there is uncertainty, given that the UK is a big market, both in terms of tourism and on a commercial basis. “The UK, besides being the leading source of tourists in the country, has traditionally been an important foreign trading partner with the province of Malaga, being in the top ranking in both exports and imports, with global trade in both directions of almost 250 million euros, “explained the president of the Chamber of Commerce in Málaga, Jerónimo Pérez Casero.
According to data from 2015, it is the sixth destination to which Malaga exports, just behind France, Italy, Portugal, Germany and the United States. In imports, it is second after China. In Spain, the budget with Britain stands at 1.1% of GDP. It is the fifth most important destination in terms of exports of goods and services.
Would you change trade relations if Brexit occurs? The Chamber of Commerce is not clear, although they note that any action against the liberalisation of freight traffic would be a ‘restriction to the exchange value “and would have a” negative effect on transactions between countries “. “You cannot predict which products would be most affected as it would depend on many variables, although it should be stressed that drinks and food products are in the top three of the ranking of exports to the UK, so it would be logical that there would be repercussions in these types of products in a sector of such importance to the provincial economy, “added Jerome Perez Casero. Specifically, the leading exports from Malaga to the British Isles are fruits, with more than 18 million euros (data from 2015), followed by beverages (10.2 million). Trops a producer and marketer of subtropical fruit based in Axarquía, has the UK as one of its main markets. The UK accounts for approximately 20% of its exports of avocado, and is always among the top three countries in foreign sales.
Trops manager, Enrique Colilles admits that there is “uncertainty” but is confident that the business will not suffer. “We think we will not be affected because we have a dominant position in the market with our product. But from a financial point of view now we work in euros with the UK and obviously if it they left the EU we would have to go back to the pound and the exchange rate factor would impact negatively owing to the increased complexity “he said. To Colilles, Brexit would obligate them to take out exchange rate insurance which would involve an additional process and would complicate operations but would not endanger the “commercial viability” of their products. “It would work similar to that in other European countries outside the EU, such as Switzerland. There we work dynamically and are fully adapted, “he added. The head of corporate relations Esteban Carneros of the company Dcoop, which exports oil, table olives and some wine pointed out that Britain is not in the ‘top ten’ of its foreign sales.
“We understand that, it would not affect us because we do not enter into competition with their products. And therefore this shouldn’t result in a deterioration of trade relations. Other foods such as dairy and meat might be affected, because they themselves are producers. In our case, if they want to continue consuming oil or olives, they will have to buy them “, said Carneros, indicating the possibility of preferential arrangements as those that exist with other countries outside the EU such as Norway and Iceland.
Concern exists among companies that have investments in the UK. ICEX (Spanish Institute for Foreign Trade) notes that Spain has become one of the leading foreign investors in the UK. Among companies based in Malaga which have strongly backed the UK market is Aertec Solutions, which has an office in Bristol and about ten people dedicated to their business on British soil, working for various aircraft manufacturers and in partnership with engineering companies in the country at several airports.
“Part of our work is linked to Airbus programs and this is a major European company. There is much uncertainty in the UK on how to react to Brexit. Airbus will have to decide whether to keep investment and workloads going. The uncertainty is already damaging. An uncertain horizon drives away investment that takes several years to pay off and the aviation industry is all done with a long-term vision, “warned the CEO of Aertec, Antonio Gómez-Guillamón, who pointed out, however, that he has not thought about leaving the country in the event of Brexit.
“Within Europe, the UK is curiously the most open to companies and easier to do business with a more open mind, without so many administrative or cultural barriers. I want them to stay and the rest of Europe to learn from them and their way of understanding the economy, and the markets “added Gómez-Guillamón.