The news that the United Kingdom had voted to exit the European Union came with immediate economic effects in the region. There was a drop in European stock markets by nearly 12 percent. The decision also led to the devaluation of the pound sterling that fell to the lowest level recorded since 1985. Financial expert, Flavio Maluf, holds the opinion that the departure from the EU will have lasting effects on the world’s economy.
Flavio Maluf is a Brazilian businessman and mechanical engineer who attended Armando Alvares Penteado Foundation (FAAP). He is one of Paulo Maluf’s sons. He is the current president of GrandFood, which owns 2 feed brands namely Golden and Premier Pet. He also heads Eucatex, a successful sheet metal factory that was started in 1951, that manly operates in the furniture and construction sectors.
Flavio Maluf’s Take on UK’s Exit
1. The British Economy
According to official EU financial figures released in 2014, the UK is the union’s biggest contributor having channeled over €11.3 billion through the union, and received about €6.9 billion. This caused inflationary pressure in the country’s economy. Its exit will reduce this pressure. However, it will also isolate it from other EU member states in terms of free movement of goods and people.
2. Impact on the Region’s Foreign Trade
Under the EU charter, member states are free to carry out trade without the application of quotas and tariffs on products from different countries. The exit of the UK from the European Union will expose the country to new trade rates that will negatively impact its foreign trade. However, this will also allow the UK to enter new trade agreements with countries like Brazil.
3. Consequences to Brazil’s Exports and Imports
Brazil is now free to enter new bilateral trade agreements with the United Kingdom. Currently, the UK represents a paltry 2 percent of Brazil’s exports.
4. Impact on the European Union
The exit of UK will significantly change the economic, social and political structure of the European Union. Economically, the EU is largely supported by the UK, Germany and France. With the UK gone and France facing economic woes, it will be up to Germany to sustain the EU.
Keep up to date with what happens by following Flavio on social media, including his Twitter account.