Brexit: impact of UK exit on Slovenian economy mostly indirect
Today sees one of the milestones in the process of the UK leaving the EU, which for some time now has been one of the major risks to the euro area economy and consequently to the Slovenian economy. The Bank of Slovenia’s assessment is that Brexit’s impact on the Slovenian economy will mostly be indirect, via Slovenia’s key trading partners, whose share of exports to the UK is significantly larger than Slovenia’s. In common with other international institutions, we are cautioning that a final assessment of the consequences of Brexit needs to wait until the end of the transition period, which is scheduled for 31 December 2020. We also find that the immediate direct impact on the Slovenian economy will be small, given the low share of exports to the UK.
The Bank of Slovenia’s assessment is that the potential impact of Brexit on the Slovenian economy will be reflected via the make-up of indirect trade, i.e. Slovenian firms’ involvement in international supply chains.
Here we also judge that the immediate direct impact on the Slovenian economy will be small. The UK accounts merely for approximately 2% of Slovenia’s total exports of goods and services, which does not rank it among the key trading partners.
The Bank of Slovenia accords with Christine Lagarde, president of the ECB, and with the World Bank and the IMF, who caution that the final consequences of Brexit for the global economy will only be fully evident after the end of the transition period, which is scheduled to come at the end of this year. Difficult issues, such as a new trade deal between the EU and the UK, remain unresolved.
Figure 1: UK share of Slovenia’s total exports, 12-month moving average, %
Source: Bank of Slovenia
ECB press releases marking the UK’s exit from the EU:
ECB welcomes ratification of agreement on orderly UK withdrawal from European Union