The negative effects would be mainly due to changes in foreign trade. The UK is an important trade partner of Polish (2 export market for goods and services 3).
– We estimate that the total impact Brexitu by the decline of the British demand for Polish exports of goods and services would fall Polish GDP 0,5pp (assuming that the decline in British GDP by 1 percentage point lower growth rate of the Polish economy 0,2pp ).
The impact of the commercial channel would have been even larger (0,1pp) had been restored tariff barriers.
– Introduction of potential restrictions on access to the British market could further reduce Polish exports of services (over demand effect), which would reduce the growth rate of Polish GDP 0,1-0,2pp.
– the negative impact Brexitu on Polish exports could be limited by its reorientation to other markets, but it would be complicated by the likely downturn in the euro area as a result of Brexitu.
– likely limiting migration could also reduce the dynamics of Polish GDP due to the decline in profit transfers, but the impact will not be large.
On the other hand, the potential returns of Poles from the UK. Britain mitigate the growing shortages of domestic labor supply. – Brexit Poland can cost an additional 0.1% of GDP per year due to the loss of EU funds in the current EU financial perspective for 2020. (Assuming the misalignment of the impairment loss net contribution of the United Kingdom to the EU budget).
At the same time, Brexit increases the likelihood of massive cuts in funding for the Polish in the next financial perspective after 2020.
– Our base estimates of the effects of the Polish Brexitu may seem moderate. Much more negative effects (although difficult to quantify) the outlook for Polish growth could have a process of disintegration of the EU, leading to the loss of benefits from the inflow of EU funds and the free movement of goods, services and people.
According to the Treaty of Lisbon (art. 50), each Member State may decide to leave the Union. Unless otherwise agreed, the procedure starting lasts up to 2 years from the date of notification to the European Commission by leaving the EU. After notification of negotiations followed, the results of which are accepted by the Parliament and the European Council by qualified majority.
Trade relations UK. UK EU – in particular from the Central European region (CEE) – are asymmetric, because the UK. Britain is a more important source of added value (GDP) for the EU countries (and CEE) than vice versa. The share of CEE export UK. Britain does not exceed 3.0%, but the share of the UK. Britain exports of CEE countries is more than 5.0%.
Relationship commercial UK. UK, measured by the index of the intensity of the trade are the strongest of the neighboring countries of the UK. Britain (France, Ireland, Belgium, Netherlands).
The value added (GDP) of the UK. Britain gained from trade with the rest of the EU (8.8% of total GDP) is lower than that obtained from trade with non-EU countries (14.0% of GDP). At the same time GDP CEE countries to a greater extent depends on the demand from the UK. Britain, because it occupies a key place among the major trading partners of the Czech, Polish and Hungarian (with approx. 2% share of GDP). The main channel of impact Brexitu Poland is a channel of trade. We estimate that the weaker foreign trade turnover can reduce GDP growth in Poland 0,5pp (assuming that the decline in GDP growth in the UK. Britain by 1pp lower GDP growth in Poland 0,2pp, cf. Table page. 7, whereby this trade will continue to be regulated under international agreements, for example. WTO or on similar principles as in the case of Norway or Switzerland).
UK. Britain is the second Polish trade partner (after Germany) ranked by exporting value-added tax (a 2.0% share in the Polish gross value added vs. Germany with 5.0% market share). The impact of trade relations could be even greater in the case of the introduction of customs barriers, which can cost a Polish company to 0.1% of GDP. The automotive, leather, tobacco, production of rubber and plastic products, manufacture of other mineral resources and food are the most exposed to potential changes tariffs (cf. Chart below).
Assuming the principle of reciprocity in international relations, the introduction of the UK. Britain in trade with the EU effective rates of customs duties applicable to the import into the EU, may ceteris paribus, reduce the profitability of sales of the automotive industry (for 0,36pp), the leather industry (about 0,2pp), tobacco and exp. Of rubber and plastic products (by 0 , 17pp), products from other minerals (0,16pp) and food (0,15pp).
The weakening of the British demand and a reduction in the profitability of exports to the UK. Britain may trigger adjustments to the trade patterns. This would reverse the trend of increasing the share of the UK. Britain in Polish exports. (Cf. Diagram).
Possible limitations migration would reduce income transfers from emigrants, but the impact should not be significant. UK. Britain is the # 1 on the list of target countries of emigration from Polish. The number of Poles (according to GUS) staying there is close to 700 thousand. (30% of all migrants).
UK. Kingdom may administratively limit new migration in the case of Brexitu (visas, limited social security benefits), but less likely to limit the possibility of continuing to stay and work for most currently residing in the UK. Britain with Polish immigrants.
In the event of a mass return of Poles from the UK. Britain to the country a positive effect Brexitu would alleviate the escalating tensions on the Polish market and the weakening of the significance of barriers to economic growth, which is a shortage of labor supply and a possible increase in labor costs.
The possible restrictions on access to the market may further worsen the Polish exports of services – mainly transport – reducing the dynamics of Polish GDP by a further 0.1-0.2% of GDP. Exports of services represents 18.2% of total Polish exports (2015) and is a major factor in improving the result of the current account deficit (surplus in trade in services exceeded 2.0% of GDP in 2015.).
Export of services to the UK. UK (# 3 on the list of partners in trade in services) is 0.5% of GDP and is concentrated in two sectors: transport and business services (especially outsourcing). Given that the service centers are located in Poland, and that provide services at a distance, land transport appears to be the most exposed to potential Brexit. It should be noted, however, that even the current EU regulations do not eliminate protectionism in land transport (the last cases of Germany and France, trying to restrict access to their markets, road transport services).
Canal, which Brexit may cost Poland to 0.1% of GDP per year it is possible to limit the inflow of EU funds (assuming that it will not compensate for the missing contribution of the UK. Britain to the EU budget).
Poland is to be one of the biggest beneficiaries of the budget for 2014-2020, a gross inflow of funds to the Polish expected to reach 2.1% of GDP cohesion funds (vs. 2.7% of GDP in l . 2007-2013) and 3.2% of GDP for all transfers (vs. 3.8% of GDP in 2007-2013). Given that the UK. Britain is the third largest net contributor to the EU budget (even though a special discount), no contribution UK. Kingdom to the Community budget may trigger a debate on financing EU financial perspective 2014-2020, but considering the fact that the process of leaving the UK. Britain, the EU will take at least two years the probability of reduction of EU funds for Polish before 2019. Is limited.
As a result of Brexitu growing strongly while the probability of a significant reduction of the Polish in the next EU budget for the years 2021-2027. With the growing popularity of right-wing movements prone societies of the EU (especially the wealthy) to further integration (and redistribution to new, poorer member states) clearly losing support. Reduction of redistribution through the EU budget would mean additional pressure to change the model of economic growth in Poland (apart from an aging population and declining growth potential).
Our baseline estimates of the effects of the Polish Brexitu may seem moderate. Much more adverse effects (although difficult to quantify) the outlook for Polish growth may be the process of disintegration of the EU. It can be initiated by the departure of Britain from the EU, leading to a loss by Poland benefits from the inflow of EU funds and the free movement of goods, services and people.
Strong anti-EU movements are, among others, in such important countries of the EU and the euro zone as France, Italy and the Netherlands. The leader of the Dutch Freedom Party, Geert Wilders, shortly after the announcement of preliminary results of the referendum in the UK. Britain has already called to carry out a similar referendum in the Netherlands.
Team Macroeconomic Analysis PKO BP
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