Smaller European countries such as Switzerland, Netherlands and Belgium are likely to take a bigger hit since their industry and commerce isn’t as diversified as Germany’s.
As per the results of a study in Germany, the country’s transport and pharmaceutical industry are likely to be most affected by Britain’s shock historic decision to leave the European Union.
The survey conducted by ZEW based out of Mannheim found these sectors to be the most vulnerable for the German economy as a result of Brexit. Smaller European countries will also take a big trade hit.
As per the results of the survey, countries, including Switzerland, Netherlands and Belgium are likely to take a bigger hit than Germany, whose industries and business sectors are more diversified and have more trading partners.
According to Brun-Hagen Hennerkes, chairman of the Family Enterprise Foundation, the economic fallout of Brexit would be hard to predict and thus quantify. Hennerkes is the one who commissioned the research.
“Even if the German economy is doing well and tax revenues are churning, no one can really foresee the consequences of Brexit,” said Hennerkes. “No one should rely on the monetary policy of ECB President Mario Draghi.”
With Europe struggling to fight deflationary tendencies, the European Central Bank has cut interest rates into negative territory. Furthermore, in order to boost lending, spending and boost inflation, it has regularly provided banks with interest free loans and has purchased assets worth 1 trillion euros.
Theresa May, the British Prime Minister has stated she would invoke Article 50 of the Lisbon Treaty by the end of March 2017. This will kickstart a two-year divorce process.
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