'Hard Brexit' with additional impact for the euro zone (including Portugal), says BdP – O Jornal Económico


The Banco de Portugal (BdP) anticipates that a UK exit from the European Union without an agreement will have an additional impact for eurozone countries, including Portugal.

In the Economic Bulletin of May, released on Wednesday, the institution led by Carlos Costa anticipates, however, that among the 19 countries of the single currency, Portugal "should not be one of the most affected," although the United Kingdom is " the most important trading partner outside the monetary union. "

"In the event of an abrupt transition, euro area countries (including Portugal) may face an additional impact, related to a financial and confidence shock," notes the BOP.

The regulator points out that bringing the deadline for UK exit from the European project as well as the limited progress in accepting an agreement in the UK parliament "has contributed to increased political tensions, intensifying the climate of uncertainty and deteriorating confidence of economic agents ".

The Bop explains that several studies point out that the exit will have a negative impact on the British economy, with less impact for the euro zone.

"The negative effects presented in these studies are all the more severe because the nearer the future economic relationship is and the more abrupt the transition, the sudden and unconformed exit being the most serious of the scenarios considered," the document states. "The consequences for the euro area will mainly, but not exclusively, be associated with changes in the conditions of trade in goods and services, since the United Kingdom is one of its most important partners (accounting for 13% and 19% of exports of goods and services, respectively). "

The institution led by Carlos Costa stresses that regardless of the exit agreement and the future economic relationship, "the exit process has already had effects in the British economy through the exchange depreciation after the referendum and, more recently, by increasing uncertainty and of the confidence of economic agents ".

"In a context of favorable financial conditions and global economic expansion, the growth rate of corporate investment in the UK has been lower than in other advanced economies (G7), especially during 2018, which will have contributed to the uncertainty associated with the process out of the European Union, "he adds.



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