Spain Brexit PANIC: National bank issues dire warning over economy at risk with no deal

Brexit: Expert says there is 'a lot of fudge room' in negotiations

A trade deal between the EU and UK is still uncertain as talks are still ongoing due to neither side agreeing on outstanding issues such as fishing. Without a deal, the UK would leave the bloc on World Trade Organisation terms, meaning tariffs would go up on imported goods from both Britain and Spain at an average of three percent. A new report by the Bank of Spain from September showed how the country’s economy will be affected in the single market due to Brexit.

The report showed Spanish exports to the UK “increased by nine percent in 2019″, which was equal to 3.4 percent of Spain’s GDP, but exports could suffer if trade rules change and there is no deal.

Britain is also said to be Spain’s biggest foreign investor as more than €8 billion was put into the Spanish economy this year, according to the British Chamber of Commerce in Andalusia.

Michael Gasiorek, professor of economics at the University of Sussex and director of the UK Trade Policy Observatory, warned EU countries such as Spain may be feeling reluctant to work with the UK after the transition period ends.

He added it “did not surprise” him that Britain was now recording falling market shares in exports of goods by certain industries,

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He warned that in some EU markets “there is some incentive not to buy in the UK” due to the uncertainty over pricing and regulations from next month.

Spain is the UK’s seventh-largest trading partner, according to the Department of International Trade.

The main British exports to Spain include cars, medicinal and pharmaceutical products, as well as mechanical power generators and consumer goods.

Meanwhile, the UK also exports financial, IT and business services to Spain.

On top of Brexit uncertainty, the Spanish economy is already deep in recession due to the coronavirus pandemic.

The Government is expected to work out its forecast for economic contraction this year to between 10 percent and 11 percent of GDP.

The Bank of Spain has revealed the four other regions are exposed over uncertainty, which are Murcia, Valencia, Galicia and Aragón.

The tariffs are unknown until a trade deal is agreed, but the report by the Bank of Spain uses the WTO rates to EU exports as a way to calculates that “the average tariff for total Spanish exports to the UK will be just under seven percent”.

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Brexit: Michael Gove insists UK will be 'in control' of waters

Similarly to other EU members including France, Spain is said to be worried about its fishing industry in the post-Brexit world.

Basilio Otero, president of the Spanish national federation of fishermen’s associations (FNCP), recently said no deal would hit the fishing industry hard.

He added a quarter of the hake fleet’s revenue, which works out at around £24.4 million a year, comes from catches around the coasts of Ireland and the UK.

Mr Otero said: “There is high concern that those vessels could move to Irish waters and collapse the area.

“Conversely, Irish authorities announced that in the face of a threat like this the Irish government would close the access to its waters temporarily until EU authorities re-establish a proper balance in this matter.”

He added there was concern over the greater competition in Spanish waters in the event of no deal.

He said: “He said: “Supertrawlers from the Netherlands, Belgium and Denmark which usually operate in UK waters would have to move away and find new fishing opportunities elsewhere.

“In recent years we’ve seen some to them navigating in the Bay of Biscay also, probably preparing for this possible no deal between the EU and the UK.

“This would mean greater competition in our fishing grounds too which is another reason for concern.”

Spain’s foreign minister Arancha González also recently offered up her explanation of why Brexit trade talks between Britain and the EU are failing.

She argued trade deals are aiming to establish interdependence between parties, rather than independence, which could be why the UK and EU have still not ended talks.

Ms González said: “At the heart of this, whether it’s on fishing or whether it’s on the level playing field, it’s a very stark situation.

“I’ve done many trade agreements in my life and trade agreements are not about trying to assert one’s independence, they are made to manage our interdependence and this is what is at stake here.”

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