Flavio Maluf, a prominent Brazilian businessman has recently spoken about the impact of UK exit on the European Union and its potential ramification on Brazil’s business relationships. As the president of Eucatex, one of the first companies in South America to produce environmental sustainable building products, Portuguese businessmen in Brazil are always eager to hear and translate his thoughts.
Flavio Maluf said that regarding the immediate impact of UK exit, it is notable that there was a large drop in stock markets across Europe, which fell more than 12%. The demise of the markets also resulted in massive devaluation of the British currency as it reached its lowest level since 1985. According to figures released by the European Union for the year 2014, the UK has contributed more to the EU, passing around € 11.3 billion compared to € 6.9 billion it received. However, Flavio still insists that the end of the free movement of people and goods between UK and European Union member countries will bring unexpected negative results in the coming years.
Similarly, Flavio predicts that trade between EU and UK will have mixed consequences. Historically, businesses in UK enjoyed free trade quotas and tax on products imported from other countries. With the new status, the UK will have new rates in relation to what was practiced before, which is likely to harm the country’s foreign trade balance with the EU. On the other hand, the new trade terms can also bring further benefits to the UK, as from now, the country may enter into bilateral agreements that were not previously feasible.
Taking about bilateral agreements, Brazil may also benefit because it will have the chance to enter into bilateral agreements with several EU countries, which were previously traded on the basis of EU standards and depending on the product type, were suffering from impediments and rates. However, these benefits will be limited because UK is not a major trading partner of Brazil as UK represents less than 2% of Brazil’s annual exports.
Flavio Maluf also claims that Germany and France will need to sustain the current EU setup. As France’s economy is already weak, Germany will need to rise up to the challenge. In the near-term, the exit can have a big impact on the global economy as increased pressure on either France or Germany may lead to the end of European Union. Read more about Mr. Maluf’s remarkable career on his LinkedIn profile.