Brexit will have short to medium-term negative economic impact on Portugal
The divorce between the United Kingdom and the European Union will have a short to medium-term negative impact on Portugal’s economy according to a report.
With ratings agency Standard & Poors warning that a hard Brexit will unleash a prolonged recession in the United Kingdom, it has been calculated that Portuguese exports could fall by as much as 26%.
According to the study carried out by the Portuguese Enterprise Confederation (CIP – Confederação Empresarial de Portugal) in partnership with Ernst & Young – Augusto Mateus & Associados, released on Wednesday, there is the possibility of “a reduction in Portuguese imports to the United Kingdom of between-1.1% and -4.4%”.
The report warns of a falloff in Direct Foreign Investment flows of between-0.5% and -1.9% and reductions in money transfers from the UK to Portugal by émigrés of between-0.8% to-3.2% which could “have repercussions on the Portuguese economy resulting from a contraction in the UK economy.
According to Lusa, which has access to the document, “In the medium to long-term changes in the economic framework between the UK and EU would strongly impact exports of goods and services, resulting in potential reductions in total exports of between 15% and 26% depending on the type of future commercial relationship that will be established.”
According to the authors of the study, there are “clear signals that the effects could be significant, taking into account that the United Kingdom is the 4th most important market as an exports destination for Portuguese goods and the first in terms of the export of services.”