Potential implications of Brexit for businesses in Belgium has been saved
Potential implications of Brexit for businesses in Belgium
Preparing for all eventual outcomes
Belgium is one of the countries most vulnerable to Brexit due to its strong trade links with the UK. Almost nine percent of total exports from Belgium are destined for the UK (EUR 31.62 billion in 2016), and nearly five percent of Belgium’s total imports come from the UK. However, Brexit is about more than the possibility of tariffs and customs procedures being re-introduced. Significant regulatory issues may arise, new dispute settlement procedures are likely to be needed, greater exchange rate volatility may ensue, and the cost of doing business with the UK will rise.
Customs and trade
Strong trade links between the two countries make Belgian companies vulnerable to Brexit, especially in sectors such as the automotive industry, textiles and carpets, agri-food and beverages and pharmaceuticals. Pharmaceuticals account for 11.8 percent of Belgium’s exports to the UK. Thirty percent of Belgium's exports of special woven fabrics, tufted textiles and lace go to the UK.
The services industries also have to prepare for the risks of Brexit. In 2013-2015, the UK accounted on average for 8.7 percent of service imports and 8.5 percent of service exports from and to Belgium. For example, key logistics and transport services are provided through Belgian ports connecting Belgium, the UK and global markets.
The impact of Brexit will not only be felt by businesses. Out of the more than four million people who will be affected by Brexit, nearly 25,000 live in Belgium and some 30,000 Belgians live in the UK.
Soft or hard Brexit
Brexit negotiations officially started in June, and the EU and UK lead negotiators’ teams must close a deal on the terms of the UK’s exit from the EU by March 2019 that will have broad implications in many areas, including customs and trade.
The result of the negotiations will need to prescribe how the UK should end its membership of the EU, and manage issues such as its future relationship with the EU Single Market (and the EU Customs Union). There are several possible future scenarios, and different degrees of market harmonisation are possible.
Considering the possible outcomes of the negotiations leads to the question of what a “hard” or “soft” Brexit means. Whatever the scenario, it is inevitable that Belgian companies, both those trading with the UK and those with operations in the UK, will have to deal with a rising cost of doing business with the UK.
About the Belgium’s Brexit report
From a customs and trade perspective, this report reviews possible scenarios and identifies considerations that the negotiators should take into account, and steps that Belgian companies can take to prepare for the potential challenges of Brexit.