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Against the backdrop of difficult negotiations about how held divorce once a strong marriage between the EU and the UK, might get the false impression that Europe is a victim in this situation, and Boris Johnson proudly and inexorably leads Britain from the "rotten and old" Europe in the a kind of "bright future". However, according to the analytical department FortFS, in any case, it is the United Kingdom is a victim, and "bright future" is fraught with very specific economic problems. So, what is bad for BREXIT UK and who really turns the victim?


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First of all, it should be remembered that the share of EU in the trade turnover of the UK according to various sources more than 63%. Consequently, restrictions on trade that will inevitably follow unsuccessful "divorce" a significant impact on the UK economy. According to some experts, the hard BREXIT undermine the UK's GDP by more than 5 percent during the first decade! This scenario clearly would have a negative impact on the cost of the British currency in the long term. 


Secondly, EU risks are much more modest. In the event of a hard breakup and violation of existing trade ties with the UK, the loss of EU amount to approximately 0.7% of current GDP, which is almost 7 times lower than in the UK! However, even in the case of soft BREXIT, trade agreements will continue to work just fine, but customs regulations will work against the UK. So, for example tariffs on British imports to Europe will rise clearly. Consequently, all duties for countries not members of the EU will play against the UK economy. Thus, in the future, the next few years, the UK's GDP will fall by about 3 percent, while Europe's GDP will decrease by only 0.5 percent. Again, up to 6 times the difference! Perhaps these calculations will help capitalize on the dynamics of the pair EUR / GBP experienced FOREX traders. 


Thirdly, an attempt to conclude a similar agreement with the United States (some experts believe that such a scenario is possible), and does not compensate for economic losses the UK. The US is in a phase of trade war with both China and Europe, and this means that the chances of concluding deals for UK are negligible, since Trump administration, will by all means try to compensate through increased trade with the UK, the loss of trade with China and Europe. It is easy to assume that the UK will be extremely difficult to find a good compromise in the trade relations with the United States. 

Thus, the mathematical model yet indicate imminent serious economic losses the UK and much lower loss EU, under any scenario BREXIT.
To avoid negative consequences, UK have yet to conclude a number of additional trade agreements with the EU, similar to how it works with Norway. This means that Europe is still in the hands of many strong cards and UK should not slam the door loudly


Analytics  FORTFS



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