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The Last Chance Saloon is not a great bar to frequent; the prices are high, and the service is poor. But that’s where Michel Barnier and Theresa May have been socialising of late, each with one eye on the clock.
It’s not closing time that worries them. They are watching the hours tick away towards midnight on March 29 when, as things stand, the United Kingdom will leave the European Union without an agreement.
If they needed a reminder of how serious that would be, they got it in the form of a study from Germany’s prestigious Halle Institute for Economic Research (as reported in the Financial Mirror on February 16).
It showed that a no-deal Brexit would have very serious implications, not just for Britain and the EU but for most of the world’s advanced economies. It estimated that as many as 600,000 jobs could be lost worldwide.
The study’s authors believe that demand for EU goods and services in the UK will fall by a quarter if there is a hard Brexit. They also believe that prices in Britain will rise because of tariffs imposed under the rules of the World Trade Organisation.
These rising prices mean Britons will tighten their collective purse-strings and will not go shopping elsewhere for the goods they used to get from the EU. And so, Halle finds, there will be a contraction in world trade.
It fears that within the new 27-nation EU as many as 180,000 jobs could be lost. But because of what it calls the “disruption of global value chains”, many other countries will suffer.
Services, agriculture, the metal and IT industries will be worst hit, the report concludes. It estimates that in China some 60,000 jobs could be lost. India stands to lose 33,000 jobs and the United States 15,000.
In absolute numbers, the institute estimates that Germany would suffer most, with more than 100,000 jobs at stake.
A hard Brexit would particularly affect the car industry and, as a result, the German districts of Wolfsburg (Volkswagen headquarters) and Dingolfing-Landau (BMW). A total of 15,000 employees could be affected by the decline in sales.
France, with the loss of almost 50,000 jobs would be the next worst hit in absolute terms.
In proportion to population, Ireland would suffer badly from a hard Brexit, with its employment rate cut by more than one per cent.
Malta, with a large expat population and close links with the UK, is put marginally higher on the damage list, with Cyprus not far behind.
But the downside for all these countries is nothing compared to the problems facing the UK itself.
Britain’s own National Institute of Economic and Social Research has estimated that even if Mrs May’s proposed Brexit deal is implemented, GDP in the longer term will decline by around 4 per cent. That is roughly equivalent to losing the annual output of Wales or the output of the financial services industry in London.
The cost to the average British citizen will be about €1,200 a year. For a no-deal Britain the cost per citizen would be about €1,600, the institute estimates.
These are desperately worrying times for British expats who, in addition to the concerns we all share, have fears about their pensions, currency devaluation and erosion of the value of assets they still hold in the UK.
I have had several expats, some quite distressed, calling the Woodbrook Group looking for advice. Unfortunately, we can’t make Brexit go away. But we can help you to steer your way through it, at least so far as your personal finances are concerned.
These are times of deep uncertainty over which individuals have little control. It is important therefore to make the most of the assets we can control.
Woodbrook’s expert financial advisers can help you understand your options, how to address your income needs, and how much wealth you will need to support the lifestyle you want.
We will try to render you safe from Brexit although, until Barnier and May have emerged from the Last Chance Saloon, that is not a promise I would care to give.
