Seminar - Hot topics treasury
Brexit - The grand finale
www.pwc.com
Strictly privateand confidential
14 June 2018
PwC 14 June 2018
Strictly private and confidential
1 Welcome and introduction 3
2 Brexit: The Process 5
3 The Economic Impact: the UK versus the EU 9
4 The Impact on Trade 17
Contents
2Seminar - Hot topics treasury
PwC 14 June 2018
Strictly private and confidential
Welcome andintroduction
1 Welcome and introduction
3Seminar - Hot topics treasury
PwC 14 June 2018
Strictly private and confidential
With you today
1 Welcome and introduction
4Seminar - Hot topics treasury
Erika CarlssonResearch AnalystClients & MarketsT: +31 (0)88 792 28 50M: +31 (0)631 77 72 [email protected]
PwC 14 June 2018
Strictly private and confidential
Brexit: TheProcess
2 Brexit: The Process
5Seminar - Hot topics treasury
PwC 14 June 2018
Strictly private and confidential
Brexit: the context
2 Brexit: The Process
6Seminar - Hot topics treasury
No à la carte fourfreedoms
East vs West
Immigration andtrade
Timing Art 50
Brexiteers versusThe City
North vs South
PwC 14 June 2018
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PwC’s main scenarios
2 Brexit: The Process
7Seminar - Hot topics treasury
No accessagreement(WTO terms)
Significantdisruption to UK-EUeconomic relations
•WTO terms applied• Independent migrationpolicy
•No access to the internalmarket
•No UK contribution to theEU budget
•The UK not part of the EUCustoms Union and noaccess to intra-EU tradesystem
Free TradeAgreement
(Canada model)
Medium degree ofdisruption to UK-EUeconomic relations
•Market access dependingon the shape of the FTAdeal struck
•No application of fourfreedoms
•No influence over EURegulations or Directives
EEA member(Norwegian option)
Low degree ofdisruption to UK-EUeconomic relations
•Application of fourfreedoms
• Application of EURegulations and Directives
• Access to single market forFS via passporting
• Contribution to the EUbudget
BilateralAgreement
(Swiss option)
Medium degree ofdisruption to UK-EUeconomic relations
•Access to some areas of theinternal market, at the costof adopting the relevant EUregulations
•No application of fourfreedoms
•No influence over EURegulations or Directives
•Not part of the EU CustomsUnion and no access tointra-EU trade system
Lessdisruption
Moredisruption
PwC 14 June 2018
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The timelines – where do we go from here?
2 Brexit: The Process
8Seminar - Hot topics treasury
PwC 14 June 2018
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The EconomicImpact: the UKversus the EU
3 The Economic Impact: the UK versus the EU
9Seminar - Hot topics treasury
PwC 14 June 2018
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The immediate shock after the referendum
3 The Economic Impact: the UK versus the EU
10Seminar - Hot topics treasury
25 June2016
PwC 14 June 2018
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But is the worst yet to come?
3 The Economic Impact: the UK versus the EU
11Seminar - Hot topics treasury
2016 2017 2018 2019
Source: PwC UK, UK Economic Outlook, March 2018
UK annual GDP growth, 2017-2019
PwC 14 June 2018
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The UK at the bottom of the growth league in 2019
3 The Economic Impact: the UK versus the EU
12Seminar - Hot topics treasury
0 1 2 3 4
Italy
United Kingdom
Belgium
Portugal
Denmark
France
Greece
Austria
Germany
Sweden
Finland
Spain
Netherlands
Luxembourg
Ireland
Annual GDP growth in 2019, selected EU economies
Source: HIS Markit
PwC 14 June 2018
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But the inflation shock in the UK will subside
3 The Economic Impact: the UK versus the EU
13Seminar - Hot topics treasury
0,00
0,50
1,00
1,50
2,00
2,50
3,00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
UK annual inflation, 2013-2023
While the Brexitnegotiations willkeep the pound
range bound
PwC 14 June 2018
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Meanwhile Europeans seem to have found back their confidence …
3 The Economic Impact: the UK versus the EU
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Consumer Confidence Indicator, EuropeanCommission
Business Confidence Indicator, EuropeanCommission
PwC 14 June 2018
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But Europe is still astonishingly diverse
3 The Economic Impact: the UK versus the EU
15Seminar - Hot topics treasury
GDP per capita developments since 1997, selected EU economies
Source: The Financial Times
PwC 14 June 2018
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And some trading nations will be more affected than others
3 The Economic Impact: the UK versus the EU
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9N
eth
erland
sG
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any
Den
mark
Malta
Hun
gary
Bulg
aria
Slo
venia
Luxem
bourg
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eden
Irela
nd
Italy
Cro
atia
Austr
iaE
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Spa
inLatv
iaC
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chR
epu
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ugal
Belg
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Pola
nd
Fra
nce
Gre
ece
Lith
uania
Fin
land
Slo
vakia
Rom
ania
Cyp
rus
Current account balance, selected EU economies
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The Impact onTrade
4 The Impact on Trade
17Seminar - Hot topics treasury
PwC 14 June 2018
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Some countries have a larger exposure to Brexit
4 The Impact on Trade
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Trade in goods, Exports to the UK as a % of GDP
0%
1%
2%
3%
4%
5%
6%
7%
2015 2016
PwC 14 June 2018
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And some sectors more than others
4 The Impact on Trade
19Seminar - Hot topics treasury
Relative importance of exports to the UK, estimated economic impact of WTO scheme andindustries at risk
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Especially if tariffs are re-introduced
4 The Impact on Trade
20Seminar - Hot topics treasury
UK and EU industries facing the highest tariffs in a WTO scenario (weighted %)
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And there are non-tariff barriers too: shipments and time delay at border
4 The Impact on Trade
21Seminar - Hot topics treasury
Dispatch
Shipments UK to Germany pre-Brexit
Shipments UK to Germany post-Brexit
Preparation Dispatch Arrival
12 hours
Preparation Declaration Clearance Dispatch Preparation Declaration Clearance
72 hours
PwC 14 June 2018
Strictly private and confidential
So what is your perspective?
4 The Impact on Trade
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