The short sightedness of CEE governments in staying out of the Brexit process will cost them dearly in a no deal exit scenario.
Having toured several CEE capitals over the last six months I have been struck by the consistent lack of government engagement in Brexit. I have been met very cordially but with little appetite to discuss specifics around the existing direct and indirect trade relationships with UK, and what may change in different scenarios. After a general discussion the conversations usually end with “I am sure things will work out well in the negotiations.”
CEE’s economies have so much to lose if a deal is not agreed. For example, the continuance of UK data transfer rules is critical for their offshore IT services sector. At the same time, much of their manufacturing exports are tied up in the cross-EU supply web in which the UK is an essential element. These are just two issues which will cause more economic damage and tax revenue loss in the case of a no deal Brexit than the loss of structural funds in the next round of the EU budget. Yet the governments concerned did not seem to be interested in using their significant block powers to ensure their interests were protected.
I fear that they have been bent to submission by the European Commission through warnings of a loss of budget allocation in the next round if they “rocked the boat.” They potentially (ever increasing in likelihood) risk a much bigger proportional hit to their economies than those of France and Germany with less scope or fiscal levers to mitigate the damage.
Let’s hope that it all comes good in the next months and I can be accused of nothing more than scare mongering. But is things do not work out, who will be to blame for the mess?
The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy.