Brexit business uncertainty – Will next week’s vote provide answers?

At a business seminar on ‘Brexit – A Financial Markets / FX Perspective’ held by the Malta Business Bureau and Bank of Valletta on 7 March, businesses gained insight on the latest developments in the Brexit debate and how it will affect their day-to-day operations.

In his opening address, Frank V. Farrugia, President of the Malta Chamber of Commerce, Enterprise and Industry, highlighted the increased uncertainty over the UK’s departure from the EU. Mr Farrugia stated, “A ‘No deal Brexit’ seems to have become the only true option at this stage. The votes, which Prime Minister May has announced and which will take place in the House of Commons next week, may change this and give some more certainty on the chosen path forward.  However, given the circumstances, it is now our duty to stand foursquare by our members and businesses to support them through these challenging times ahead.”

Keynote speaker Christopher Dembik, Head of Macroeconomic Analysis at Saxo Bank, remarked that whilst some economic sectors within the EU and some EU member states will be more exposed than others, from a macroeconomic level, Brexit is mostly a British problem with risk of contagion close to zero. He also explained that the probability of a delayed Brexit and a new referendum are high, however, he believes that the main worry is the lack of new credit growth, which is the UK’s top issue for medium and long-term macroeconomic output.

Mr Dembik’s presentation was followed by a panel discussion moderated by Mark Scicluna Bartoli, Executive – EU & Institutional Affairs at Bank of Valletta. Mr Scicluna Bartoli discussed next week’s votes in the House of Commons, and how a delay of a hard Brexit may provide a breather but postponing without solutions in place will not address business needs.

Simon De Cesare, President of the Malta Business Bureau, discussed how fluctuations of the value of the Sterling to the Euro are affecting tourism operators. He also mentioned, “We still need to see the effect of Brexit, be it soft or hard, on the UK’s economy. We have already seen a number of jobs being moved to mainland Europe, and if the UK economy enters a recession, there could be a profound impact on potential travellers who rather than travelling to lower cost destinations would likely simply choose not to travel at all.”

Stefano Mallia, President of the Brexit Advisory Group within the European Economic and Social Committee, noted the feeling of frustration and fatigue, as well as the sincere desire to come to a conclusion. Mr Mallia also made reference to the Single Market and commented that there is a huge conviction that whatever happens, the Single Market cannot be jeopardised. He stated, “The Single Market is way to important for the economies of the EU.”

Glenn Micallef, Head of EU Secretariat within the Ministry for European Affairs, explained how the EU has already started working on contingency plans and legislation just in case a Brexit deal is not agreed. As an example, Mr Micallef pointed out the aviation agreement which was concluded recently at an EU level to ensure continuity of air travel between the UK and the EU.

Concluding the event, Tony Zahra, President of the Malta Hotels and Restaurant Association, further emphasised the very uncertain nature of Brexit, which makes it hard to talk about and harder to prepare for. Mr Zahra remarked that 29 March is only a few days away and he certainly hopes that a deal is reached before then, for the consequence of a ‘No deal Brexit’ are too disastrous to even entertain.

Whilst thanking Bank of Valletta for their collaboration, MBB CEO Joe Tanti who chaired the event, encouraged the EU institutions to assist businesses address the current uncertainty due to Brexit and urged Member States to uphold the integrity of the Single Market in spite of the populist political climate.

The Malta Business Bureau is the EU-business advisory office of the Malta Chamber of Commerce, Enterprise and Industry, and the Malta Hotels and Restaurants Association.