Hoping for Orderly Brexit
After the UK Conservatives won the largest landslide in an election since Margaret Thatcher’s victory in 1987, Portugal’s Prime Minister António Costa said he hoped that Britain’s departure from the European Union would be “an orderly one.”
“Now we want Brexit to take place in an orderly and non-chaotic way. Now that Brexit will happen, it should be properly negotiated, agreed and prepared” said the Portuguese Prime Minister on Friday.
Widely seen as an election fought solely on the issue of Brexit in what was, in effect, an unofficial referendum on the will of the British people, the UK will now probably leave the European Union on January 31, 2020.
The Conservatives won by 364 seats (+ 66) while the opposition Labour Party suffered a disastrous defeat with only 203 sets (-42). The SNP got 48 seats, the Liberal Democrats 11 and the Northern Ireland DUP party just eight. Nigel Farage’s Brexit Party got 0 seats.
The Government won the election by targeting pro-Brexit long-held labour seats, including the former mining constituency of Blythe Valley in Northumberland, Workington, Wrexham and Bishop Auckland. Making gains in Scotland, the SNP party leader Nicola Sturgeon is now likely to make a bid for a second independence referendum in Scotland over Scotland’s position in the EU and, in doing so, trigger the possible disintegration of the United Kingdom.
António Costa called the result “a relief” because in any other way “there would have been consequences both for citizens rights and companies and this would have been extremely negative” he said.
“Now we will wait and see if the British Parliament approves the final agreement. As is known, this is the fourth agreement that the European Union has negotiated with the United Kingdom and I hope it will be the last”.
The UK Pound Sterling gained 1.30% against the Euro and the US dollar while the FSTE 100 Index saw shares climb 1.78% to 7.403 points as the markets reacted positively to the end of three years uncertainty.
Portuguese businessman Bernardo Ivo Cruz who operates in London and is a fierce ‘remainer’ who runs the London Brexit Monthly Digest told Essential Business that the certainty that Brexit would now happen would have an impact on bi-lateral trade but that the connection between the United Kingdom and Portugal and bi-lateral business relations would be “able to weather the waves of Brexit” and expressed the belief that things would settle down and be ‘ok’. “We will now need to see what kind of relationship the UK will build with Portugal going forward.”
However, he was more concerned about the geo-strategic and geo-economic Atlantic dimensions of Brexit which Portugal and the UK along with Ireland face as Atlantic maritime nations.
“Without the UK in the EU to balance out the EU’s continental/Atlantic dimension I fear the EU will become more continental in outlook which is not good from Portugal’s point of view as an Atlantic nation.
“Portugal now runs the risk of being more isolated economically from the decision-making centre of power in Brussels without having a historically powerful economic partner like the UK at the table in Brussels which will leave us more on the fringes with all the economic impacts that might entail,” he said.
Bernardo Ivo Cruz added that with the US’s growing lacklustre commitment to NATO and Europe strategically as well as a weakening interest in the Atlantic dimension, the traditional balance was being lost between the US, UK, Ireland and Portugal on the one hand, and mainland continental Europe on the other.
“This means that the Atlantic countries may now start to look a lot less important and interesting in terms of business and the economy and this could prove a problem” he argued
The businessman, who is a member of the board and executive committee of Sofid, S.A – a Portuguese Development Finance Institution and a board member of the Lisbon Club – a Think Tank on International current affairs with particular emphasis on Portugal and Europe, pointed out that the World Economic Forum had highlighted 29 mega economic powerhouse zones worldwide which drive the global economy of which Europe had five megaregions: Paris, Amsterdam, Brussels and Munich; London Leeds and Manchester; Vienna and Budapeste, Rome, Milan and Turin; and Barcelona and Lyon.
“Of these mega-regions worldwide, only four are strategically in the Atlantic sphere so after Brexit we in the EU essentially lose a mega-region and no longer have a major economic player and presence in the Atlantic which has always been so vital to Portugal’s economic strategy,” said Cruz.
Cruz also said he worried about the consequences that Brexit would have on the internal dynamics of the United Kingdom and the knock-on effects this could have on Portuguese-UK business confidence.
“I am worried about the future of the Union. The Conservatives won in the UK expect in London and some university cities and if Brexit is not well managed it has the potential to cause a lot of problems for business confidence all round” he said.
Christina Hippisley, Director of the Portuguese Chamber of Commerce in the UK, said that on a personal level her heart “sank” as it became clear the Conservatives would win a landslide victory.
“I am a passionate ‘remainer’ and Liberal Democrat supporter but at least, from a business point of view we now have an end to uncertainty which markets and investors hate and clarity at last.
“Clarity can only be a good thing from both the perspectives of UK residents living in Portugal and Portuguese citizens living in the UK. It will also help British citizens who have been considering moving to Portugal to work, retire or purchase a property to make a final decision,” she said.
Cristina Hippisley said that the Chamber of Commerce’s ‘Moving to Portugal’ programme has been “incredibly successful” this year and expected from feedback and interest that 2020 would be no exception, expressing the belief that the decision on Brexit would now galvanise the wait-and-see prospective buyers and investors to decide now one way or the other.
She also said the decision from the election to move forward with Brexit was positive in the long run for business. “We now know that we have passed the point of no return and the genie cannot be put back in the lamp.”
The Portuguese Chamber of Commerce director said that it was likely and positive that there would now be a ‘soft Brexit’ since Boris Johnson no longer had to worry about his hard-line constituents and party members which might have forced a hard Brexit which would have been “disastrous” for Portuguese-UK bi-lateral business.
“There is no need to have a hard Brexit now, Boris Jonson does not have to worry about his hard liners. As for Portuguese companies, several of which had suspended their decisions to expand into the UK market by opening up offices, at least they have clarity and now know which will help them to decide either to press ahead or reconsider the UK option.”
Chris Barton, CEO of the British-Portuguese Chamber of Commerce said: “Even amongst those of us who would have preferred to have remained, I sense there is a desire to face the inevitability of Brexit and get it over and done with.”
Credit: Essential Business.