Public deficit, out of European practice: How others stand

Romania recorded the largest public deficit among the EU states in 2018, according to data published by Eurostat, except for Cyprus (-4.8% of GDP last… Mai mult

IMF report – Conclusions show that Romania has become a new and atypical growth model: through imbalances. Which will soon get to be paid

Romania’s macroeconomic imbalances have increased in the past year, and economic and fiscal policies have to change so that the population’s incomes and prospects of… Mai mult

Discharging imbalances on RON exchange rate could start even this year. Analysts’ scenarios and BNR’s uncertainty

Analysts’ scenarios on the evolution of the exchange rate are rather prudent for the coming months, but severe for the beginning of the next year… Mai mult

Stimulating over-indebtedness by stimulating consumption: Overdue loans trigger warning signal – Map of debtors

The policy of stimulating consumption has also distorted the degree of indebtedness in the territorial distribution, and rich counties are competing with the poor ones… Mai mult

Interview with Fogh Rasmussen: “NATO’s role is to keep Russians out, Americans in and Europeans involved”

The text below is a series of fragments from the interview that former NATO Secretary General Anders Fogh Rasmussen gave to CRONICILE Curs de guvernare… Mai mult


An analysis: What Brexit really means. Both for the EU economy and Britain

de Marin Pana 24.1.2017

The exit of UK from the European Union, abbreviated Brexit, will cause a decrease of the EU’s GDP of about one-sixth but significantly increase the surplus of the EU trade balance.

According to Eurostat, in current prices, the UK reached a GDP of EUR2,580 billion in 2015, of the EU total of EUR14,708 billion.

Basically, the EU will lose its second-largest economy (Germany exceeds EUR3,000 billion per year), but we should take into account the massive fluctuations of the British pound, which appreciated to record levels two years ago and has been slowing down throughout 2016.

While France showed, also in 2015, only EUR 2,181 billion, let us recall that the situation was substantially different in 2011, with the Hexagon at EUR2,059 billion and the Albion at EUR1,876 billion only.

We should note that the average EU living standard will not change significantly in the absence of the UK. The UK only ranked tenth in 2015 in terms of standard purchasing power parity adjusted GDP / capita, with 109.7% of the EU average and slightly above 106.3%, the level of the Eurozone, recently expanded with several former socialist countries.

Incidentally, there was no case to be otherwise, since the UK’s position in terms labour productivity per employee, with only 34.9 euro/hour worked, is far behind countries like France (46.9 euros/hour) or Germany (42.5 euros/hour). And slightly ahead of the EU average reference, Italy (33.2 euros/hour), or the slightly larger country that caught up, Spain (31.6 euros/hour).

It is certain that without the UK, the EU can no longer (but extremely difficult) aim to the role of the most important player in the global economy. Which it had planned and to which it would have been entitled due to its surface area, population, the level of development and if you wish, the historical tradition. The 1st position that it already held by trade and foreign direct investment, even without having the highest GDP (based on some calculations, it exceeded both the US and China in 2015, by standard parity purchasing power), nor the most important currency used in trading.

EU trade in goods – a relief without Britain

If calculating the foreign trade balance of the Great Britain in 2016, the available data for 11 months indicate a relatively fifty-fifty split of the UK’s trade flows with the EU and non-EU countries. Which shows a lower integration with the EU economy (for reference, Romania operates over three-quarters of the trade with European partners).


  • Foreign trade of the UK, 11 months 2016
  • Destination      Intra-EU                                  Extra-EU                                 Total
  • Billion euro      Growth             Billion euro      Growth            Billion euro      Growth
  • Export
  • Import
  • Balance


In addition, we can see a five percent decrease last year, both in the intra-EU exports and imports. This is where the negative balance of the UK went below the threshold of EUR- 100 billion.

Beware, though, relocating the trade toward the countries outside the EU does not seem to be an action of success either. Despite the devaluation of the British pound, which should have helped the exports and discouraged imports, the negative balance of the British trade has expanded by 36%.

It is noteworthy that on the extra-EU side, the decline in exports was more than triple (-17%), while the imports advanced by eight percent. The result was a real explosion of the trade deficit in relation to the non-EU countries, which increased more than two and a half times compared to the same period of the previous year and rapidly moved closer to the absolute level recorded in the trade with the EU countries.

For the EU trade in goods, the UK’s exit from the EU will only significantly improve the final result. Between January-November 2016, the EU exported goods worth EUR 1,581.2 billion, to which Britain contributed only 11% and imported goods worth EUR 1,561.2 billion (of which the UK had 17%), which obtained a small surplus of EUR 20.2 billion.

If recalculating the non-EU segment without the UK, the EU surplus for only 27 countries would increase 5.5 times, to EUR 110.9 billion. If we add the effect of Britain moving to the non-EU category, the current intra-EU deficit of EUR 104.8 billion is added and the EU trade balance goes up to EUR 215.7 billion, or more than ten times higher than in the current Eurostat statistics.

Net contribution to the EU’s finances

Regarding the extensively invoked net contribution of the UK to the EU budget, beyond the data for 2014 that show in simple terms payments of EUR 14 billion and amounts used of about EUR 7 billion, it is worth noting that the situation is quite different than the one publicised during the referendum that led to Brexit. In a comparison with the amounts above or the GDP, the sum of seven billion is not much.

In fact, the UK is the developed Western country that paid the least in respect of its Gross National Product to support the functioning of the EU. The average results for the financial years 2007 – 2013 indicates that the UK had negotiated a special status within the EU, which resulted in the following position:


  • Average annual net contributions of the main Western countries to the EU budget (share of GNP)
  • The UK
  • Italy
  • France
  • The Netherlands
  • Denmark
  • Belgium
  • Germany


The best part is that a 2016 report by PricewaterhouseCoopers shows that the Brexit’s effect on the British financial services, which employ 4% of the labour force and generate 12% of the budget revenues, will amount to – 2% of the added value of the economy in 2020 and -3.3% in 2030. The year when the effect will be a loss of EUR 8 billion, at the value from 2015. In simple terms, more than the annual cost of the EU membership of EUR 7 billion, mentioned above.

Altogether, although the UK’s exit will significantly weaken the economic strength of the EU, the impact on the British economy is expected to be much tougher. Of course, Britain paid substantial amounts to support the EU budget but has not thought about the costs they will bear after leaving the EU.

In short, Brexit will be an unwanted lose-lose situation, where the UK will be the biggest loser.

Mergeți în homepage ›

Publicat la data de 24.1.2017

Lăsați un comentariu


Romania - EU country with highest risk of dying in a road accident, Bulgaria is quickly decreasing number of victims since it built motorways

Romania recorded the highest road deaths in the EU also last year, with 96 deaths per one million inhabitants in 2018, almost double the EU… Mai mult

Latest developments in progress at Health Ministry: Differentiated wages based on performance, competitions organised at a regional level not by hospitals

Sorina Pintea announced on Thursday further new changes that will be brought to the functioning of the health care system, including new rules for employment… Mai mult

ANAF changes selection procedure for liquidators. Main changes

The new order on approval and selection procedures for insolvency practitioners is an important step to a very good direction, industry experts say. ANAF is… Mai mult

Romania loses competition for a seat at UN Security Council. MAE Excuse: Campaign started too late

Romania lost to Estonia in the final vote to get the non-permanent member position within the UN Security Council for the period 2020-2021. On Friday,… Mai mult

Business internationalization / eMAG makes a step to entry five new international markets and targets a business of EUR 2 billion

eMAG hopes to get the opinion of the Hungarian Competition Council over the next two months for the acquisition of Extreme Digital, the market leader… Mai mult

"At a distance from books": 85,000 teachers (one third of educational staff) are graduates of distance learning

Approximately 85,000 teachers are graduates of distance learning (ID) programs, Education Minister Ecaterina Andronescu said at a meeting with school inspectors from Caras-Severin County. The… Mai mult

Mugur Isarescu: We should make a film for Viasat History about treasure in Moscow

A book should be written or a movie should be made and sent to Viasat History about a treasure evacuated to Moscow, as it is… Mai mult

Rhythm of commercial vehicle registration increases 3 times faster in Romania than EU average

Today, the European Automobile Manufacturers Association (ACEA) announced the status of commercial vehicle registrations in EU member states + EFTA in April and cumulated after… Mai mult

4.2%, from 3%: BNR has increased inflation forecast for 2019

The National Bank increased the inflation forecast for 2019 by 1.2 percentage points, from 3% to 4.2%. Also, the forecast for 2020 goes up by… Mai mult

Emergency procedure at European Court of Justice for Romania’s question: Are MCV recommendations mandatory?

The Court of Justice of the European Union (CJEU) has decided that Bihor Court’s request to be discussed under the emergency procedure, which is a… Mai mult

Government decides to increase external borrowing ceiling by EUR 4bn. It has consumed program resources for two years

The Government's agenda for Wednesday also includes the draft decision to increase the foreign loans ceiling for 2019 and 2020 by EUR 4 billion, up… Mai mult

Preparations for Summit in Sibiu - European Commission’s recommendations for EU's strategic agenda

On Tuesday, the European Commission presented a series of policy recommendations on how Europe can shape its future within an increasingly uncertain and multipolar world.… Mai mult

Meeting between Prime Minister Viorica Dancila and Chinese Prime Minister Li Keqiang: talks on a possible involvement of Chinese companies in PPP projects in Romania

On Friday, Prime Minister Viorica Dancila had a meeting with Chinese Prime Minister Li Keqiang, during which she stated her interest in involving Chinese companies… Mai mult

So-called "Belina Law" was adopted. Opposition will refer CCR: it turns Belina Island into a fiscal paradise

The Chamber of Deputies adopted on Tuesday the bill that provides for a derogating tax regime, such as tax exemptions or reductions, for land and… Mai mult

Deveselu shield is undergoing an upgrade process; the US provides alternative defence capabilities with THAAD systems

Aegis Ashore anti-missile system installed at Deveselu 99 Military Base will go in the next period through a previously planned upgrade process, the MApN announced… Mai mult