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We have already met one – a decline in EU budget revenues due to the withdrawal of the UK from the EU since 2021
This is one of the why Lithuania has seen less money being offered from the EU budget for 2021-2002. The biggest challenge for Lithuania and the EU will be the choice of the business model between the UK and the EU
The main indicators of trade between Lithuania and the United Kingdom n. do not indicate that trade between the two countries will be severely damaged after the referendum. Exports of Lithuanian products, excluding petroleum products, were 7% in the first four months of 2018. More than a year ago, the result of the Brexit referendum in 2016 for the same period before 1966.
Exporters are encouraged by the fact that the euro has recently stabilized against the pound sterling. and the euro was on average 2% this year. stronger than a year ago. Services exports increased 12% in the first quarter and transportation services exports increased 24%. It seems that our transport companies are still not afraid of the British market and that the growth of this market is similar to that of other countries in Western Europe.
There are no major changes in migration statistics. Last year emigrated to the UK 21.6 thousand. of the population, 7%. less than a year ago, but only 5,000 of them returned to Lithuania. of the population, 22%. less than a year ago. Personal remittances from the United Kingdom to Lithuania last year have not disappeared. It is likely that emigration to the UK (as in other countries) is dying, but the number of returnees is not expected to increase significantly. According to the Migration Department, at the beginning of the year, 212,000 people were living in the United Kingdom. Citizens of Lithuania
It was recently announced that all EU citizens who wish and wish to stay in the UK before 2020. December 31 will have to register online to receive all rights for a indefinite period of residence in this country. This process will reveal the true number of Lithuanians living and intending to stay in the UK. Moreover, Great Britain, according to the current proposal, offers favorable conditions for EU citizens to remain in the country and join their relatives who live abroad
. guidelines on the business model that will be used after the end of the transition period, which will continue after the departure of the UK from the EU in 2019. March 30 in 2020 It is true that the biggest threat is that if no exit condition is agreed before March 29 of the following year, the most serious threat to Lithuania and the EU will be the choice of the business model between the United Kingdom and the United Kingdom. Kingdom and the EU
. There will be no transition period, which would mean tremendous chaos in both Britain and Europe, which would really cause enormous damage to the economy. There is no doubt that both parties are aware of the magnitude of the consequences and the likelihood that such a scenario will be very small, but it is probably in preparation.
As mentioned earlier, the official date of Brexit must also be, which will become operational after a transition period. It is clear that the UK and the EU are also able to find a solution that does not worsen business conditions, history teaches that political interests often neglect the economic motive. So the possibility of trade between countries since 2021 January 1 will be held in accordance with the rules of the World Trade Organization (WTO) – the most unfavorable scenario for all, can not be ruled out again. Certainly, unless there is a prolonged period of transition
It can be recalled that trade under WTO rules means that the United Kingdom may impose tariffs on imports from the United States. EU, while the EU will do the same. Admittedly, the tariffs for most goods are not high – in Lithuania, tariffs for most exported goods would not exceed 5%. However, it is difficult even to badess the administrative burden that exporters and importers will face as a result of non-tariff restrictions (export declarations, different standards, etc.). Therefore, this option, if possible, would be very confusing and the economic consequences would be painful for both parties.
What are the possible alternatives to trade without WTO rules? Since the United Kingdom wants to control the movement of people, it will have to exit the single market, which has a free movement of goods, services, capital and individuals. It would seem that the best option would be for both parties if the UK stayed in the customs union, but London and Brussels should go down in the negotiations.
The third scenario – a free trade agreement between the United Kingdom and the EU – would not be rejected. the two parties (notably because of the emergence of non-tariff restrictions) and the preparation of this agreement will certainly not be sufficient until 2020. By 31 December, the transition period should therefore be extended for a long time
. Lithuanian trade is relevant to the Brexit process. Since this process can not be influenced, just prepare an action plan to know what would happen if an unexpected perverse scenario occurred and that the UK withdrew from the EU without any agreement. By the way, the UK economy is growing steadily (in the first quarter of this year the annual change in GDP was 1.2%), from other major Western European countries are therefore more attractive to business
Tadas Povilaskas Chief Analyst of the Bank
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