Hard Brexit may cost Slovak economy over EUR200m

A hard Brexit could reduce Slovakia’s GDP by almost 0.3% in the long term, local media informed over model calculations of the consultancy company Deloitte. According to Deloitte model, the Slovak economy would lose more than EUR200m. Deloitte chief economist David Marek said that in case of no-deal Brexit, annual GDP would fall by EUR207m and revenues of Slovak companies – by EUR529m. According to Marek, among concrete sectors, Brexit will negatively affect in particular the automotive industry, but firms in other sectors of the processing industry would also see lower sales, in activity in real estate, transportation and other sectors. In any way, firms in industrial manufacturing would feel the most significant losses due to a hard Brexit with the automotive industry could, according to Deloitte calculations, annually lose sales of EUR53m. A hard Brexit would also hit makers of components and accessories, which supply to a great extent also German and other European automakers that will be also negatively affected by Brexit. According to Deloitte, in the case of second variant of UK departure and application of a ‘mediocre’ trade agreement, the impact on the Slovak economy would be EUR134m.

Note that the finance ministry has estimated that a no-deal Brexit could reduce GDP by 0.7-1.4% in the long run with the impact to be most notable in the first two years. The central bank has estimated that hard Brexit could cause a cumulative drop of GDP of 0.7-1.1% until 2023, mainly through foreign trade that might see a downtick – the NBS says that the uncertainty over the future arrangement of economic ties between the UK and EU that poses one of the most significant risks for economic growth. According to Coface consulting, the impact of Brexit on GDP could be in the neighborhood of 0.8-1.2%, putting some 8,000-10,000 jobs in jeopardy, with hard Brexit to affect not only the automotive industry, but also fields related to the car industry, from electronics to textile.

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