Brexit: what is the impact for French companies?
On December 24th, 2020, a trade and cooperation agreement was reached between the United Kingdom and the European Union. This agreement determines the applicable rules to relations in a number of areas, including their trade relations.
"The big losers in Brexit will be the British," said Bruno Le Maire Minister of the Economy, Finance and Economic Recovery of the French Government in an interview on Franceinfo. Since January 1, 2021, the United Kingdom has left the European Union. On December 24, 2020, an agreement was reached to establish the rules applicable to relations between the United Kingdom and the European Union in a number of areas, thus avoiding a "hard Brexit". This agreement brings changes for French companies exporting across the Channel.
What changes for Businesses?
A "soft" Brexit, but not without consequences. The main one is undoubtedly the annual loss of French exports to the United Kingdom. According to Euler Hermes, France will be the third most affected country by Brexit with export losses of 1.9 billion euros per year. In concrete terms, the most affected sectors should be transport and equipment, chemicals, machinery and electrical equipment, followed by the precious metals and jewelry sector.
The agreement makes it possible to maintain trade without customs duties or quotas, however, the British are leaving the European common market, which will lead to certain changes. Companies will have to identify themselves to French customs and if they are importing into the UK, to British customs. They will also have to review their trade agreements with their British partners to find out who is financially and legally responsible for the goods. Finally, they will need to renegotiate with carriers the extent of their obligations. Some European logistics companies such as DHL, who are working closely with EU and UK legislators, are offering solutions to help companies through this transition. At the same time, the government has set up a platform for companies on its website with answers to their questions.
What economic impact for France?
Last year, according to Treasury figures, France exported 33.6 billion euros to the United Kingdom and imported 21.1 billion euros, making the British the sixth-largest customer and seventh-largest supplier to France. The United Kingdom represents France's largest trade surplus. Brexit will therefore have an impact on the French economy. "However, the overall impact should be moderate because France's economic dependence on the United Kingdom is less and it can turn to its other European partners," says Andreas Eisl, a researcher specializing in European economic policy at the Jacques Delors Institute, on France 24.
Fishing is one of the matters that has been the subject causing the ink to flow over the last few days. Indeed, 30% of French fishing comes from British waters. But the agreement established last December 24 contains a trade agreement on fishing in British waters. It foresees that EU fishermen will maintain until 2026 guaranteed access to the areas within 6-12 nautical miles off the British coast (territorial waters) where they traditionally went. From 2026, the agreement provides for annual negotiations. Overall, the French government estimates Brexit's impact on the French economy at 0.1 point of national wealth in 2021. "That's 0.1 points too much, but it's not much compared to what it will cost the British. And above all, we will be able to cope," Bruno Le Maire assured in Franceinfo last December.