2017 will see initial Brexit implications
DUBAI — The UK’s decision to leave the European Union (EU) will have immense ramifications, and 2017 will see the initial contours of the post-Brexit landscape, Professor Trevor Williams, chief economist, Lloyds Bank Commercial Banking, said.
Addressing a seminar organised by the Institute of Chartered Accountants of India (ICAI) UAE (Dubai) about what’s next for the UK and the world in a post-Brexit scenario, Williams said while higher inflation would squeeze real incomes, sterling weakness would help offset some of the adverse impacts.
He said across the globe, developed economies face a number of challenges but there is continuing evidence of improving cyclical performance in emerging markets. The initial impact of the Brexit vote was less than feared as financial turbulence was quickly dampened by central bank intervention, not least swift action from the Bank of England, and a smooth political transition in the UK.
“However, there could still be adverse economic impacts next year when negotiations to leave start,” said Williams.
Pankaj Mundra, chairman of ICAI (Dubai) Chapter, said the Brexit referendum has set in motion an unprecedented process, though most economists believe that bilateral trading between the Gulf and the UK can only improve. “Demonstrating that bilateral deals may be preferred and more easily achieved, the UK signed a Double Taxation Agreement with the UAE in April 2016,” he said.
The event, which brought together over 200 professionals from the finance and accounting professional community in the UAE, also witnessed a panel discussion on ‘Brexit — Opportunities and Threats’. Apart from Williams and Mundra, panellists included Ankur Miglani, head of investments audit, Qatar Investment Authority, Qatar; Salman Gulzar, head of corporate banking, Mashreq Bank, Qatar; James Berry, managing partner, James Berry & Associates, the UAE.
Experts said the economic implications of the UK’s exit from the EU would mostly depend on what sort of deal is struck and how the UK responds to its ‘independence’ to chart its course free from cooperating with 27 other countries in the EU.
The UK will first have to negotiate its way out of the EU, which could take two years and then negotiate a new trade deal, which could take a further two to five years. “In the longer run, what happens will rest on the deal struck with the EU and the success of the UK in forging new ties with the rest of the world to replace its EU links,” said Williams.