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SA to feel the blow in 'no-deal' Brexit, economist warns

12 December 2018 6:25 AM
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North West University economist Raymond Parsons has warned that South Africa could be among the hardest hit by the UK’s path out of the European Union (EU).

Parsons is a referential economic commentator, having analysed and studied most of democratic South Africa’s economic trajectory. He authored books including The Mbeki Inheritance in 1999, and Zumanomics, published in 2013.

The UK is prominent in South Africa's trade prospects, as a trade partner to whom SA has exported more than R9bn worth of products.

UK Prime Minister Theresa May earlier this week deferred a vote that would have thrust the UK into the next phase of Brexit, with commentators speculating that this was an exercise in delaying the inevitable economic fallout.

In a media release, Parsons said if the UK "crashed out" of the EU’s trade arrangements, Britain would immediately change from the trade rules of the EU to those of the World Trade Organisation, and become subject to the EU's common external tariff and customs requirements.

"The real danger now exists that the UK may well crash out of the EU without a withdrawal agreement and, if that occurs, it would have serious ripple effects through key parts of the international trading system and supply chains, including SA," said Parsons.

Parsons said institutions, including the UK Treasury and the Bank of England, have emphasised the heavy economic cost of a potential Brexit "no deal" for the UK.

"The International Monetary Fund estimates that, in the event of a 'no deal', the UK would lose about 5% of its GDP within a few years - the Dutch, Danes and Belgians would lose 1% or more as well. The Irish would probably lose about 5% of their GDP," Parsons said.

He added SA may need to "evolve contingency plans" to ensure that its economic interests in both the UK and the EU were protected and disruptions kept to a minimum.


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