Portuguese American Journal

The Week: Brexit troubling times for traders… – By Len Port

By Len Port, Contributor (*)

The ‘debate’ over next month’s referendum on whether Britain should stay in or leave the European Union heated up so much this week that it is starting to look like civil war. It seems to be tearing apart the British Tory government and indeed the whole country. A wider worry in the event of a Brexit is the collateral damage in Portugal and other EU countries.

Brexit cheerleader Michael Gove says leaving would be “an empowering moment of patriotic renewal.” The Governor of the Bank of England, Mark Carney, evoked fury in the Brexit camp on Thursday by saying that leaving might spark a recession. Then the IMF’s Christine Lagarde weighed in on Friday by saying she had “not seen anything that’s positive” about Brexit. Her remarks were dismissed by Brexit supporters as “nonsense.”

Lots of strong opinions continue to be aired, but in truth no one knows for sure what a Brexit would bring. No country has ever left the EU before.

Amidst all the internal rhetoric, scaremongering and false forecasts, a calm but concerned outlook emerged this week from the British Portuguese Chamber of Commerce in London.

Founded in 1911, the BPCC is an independent, non-profit organization devoted to promoting commercial links between businesses in the United Kingdom and Portugal.

The UK is one of Portugal’s major export destinations, with almost €3 billion worth of goods going there every year. Few countries do more business with Portugal.

The BPCC reports that research conducted by international shipping experts ParcelHero concludes that the impact of a Brexit on this market could be huge. It could have serious implications not only for Portuguese traders, but also consumers.

“It’s impossible to overstate the importance of the EU to Portugal’s trade with the UK,” writes Keegan Spindler, a member of the consumer research team.

“The free movement of goods has allowed British companies to be competitive in the European market, and the cost of shipping in the EU is significantly lower than shipping to European countries that aren’t part of the Union, such as Switzerland or Iceland.

“Our research suggests that by leaving the EU, the cost of goods imported to the UK from Portugal could change by as much as 30%. That price change comes from a variety of factors that include raised shipping costs, duties and taxes and handling costs.”

Such a price change would make Portuguese goods less attractive to British consumers and reduce Portuguese manufacturers’ abilities to compete on price in the UK market.

Most Portuguese small to medium enterprises are likely to look elsewhere for their customers if Britain leaves the EU, but those who don’t will have all new challenges to deal with, among them paperwork, customs clearance and duties and taxes. Furthermore, the United Kingdom will no longer be a competitive target for the logistics industry, which is likely to mean that shipping costs will rise significantly, according to the study.

The UK is expected to be separated from countries like Portugal by a lot more red tape, making it a much less attractive proposition for international businesses.

“Our data suggests that the UK’s departure from the EU would likely force many SME’s who trade in the country to find new markets for their goods or be forced to quite literally pay the price. Similarly, a Brexit would see the cost of importing in to Portugal from the UK increase, and as Britain is one of Portugal’s biggest importers, it could be the consumers who end up paying the price.”

None of the above will apply, of course, if the Great British public decides on 23 June that voting for Michael Gove’s “empowering moment of patriotic renewal” would in fact be akin to a catastrophic moment of total madness.

Which way will it go? No one probably knows better than the betting bookmakers. Paddy Power’s latest odds:

* 2/5 in favor of remaining in.
* 15/8 in favor of exiting.

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Recent Posts by Len Port

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(*) Len Port is a journalist and author. Born in Northern Ireland, his first written pieces were published while he was working in the Natural History Museum, London. Since then he has worked as a news reporter, mainly in Hong Kong, Northern Ireland, South Africa and Portugal. In addition to reporting hard news for some of the world’s leading news organizations, he has produced countless feature articles on all sorts of subjects for a range of publications. Now living in southern Portugal, his books include travel guides and children’s stories. His ebooks – People in a Place Apart and The Fátima Phenomenon – Divine Grace, Delusion or Pious Fraud? are available from amazon.com and amazon.co.uk. His blog posts can be viewed at algarvenewswatch.blogspot.com

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