If Britain left the EU with a deal, the Czech economy would grow by 2.5 percent this year. In the case of a no-deal Brexit, it would increase its volume by only 1.7 to 1.9 percent, the ministry estimates.
A withdrawal without any deal would mean that the United Kingdom would become a so-called third party country from the point of view of the EU. This would very likely introduce tariffs and other non-tariff barriers to mutual trade.
“The Czech economy would be hit directly by a drop in foreign trade with the United Kingdom and indirectly due to a reduction in demand for Czech goods in the Eurozone – this indirect effect would be the most significant,” said Jakub Vintrlík from the press department of the Ministry of Finance. “The overall decrease in demand for the Czech export would be 1.1 percentage points due to both factors,” he added.
The Confederation of Industry of the Czech Republic estimates that the economic damage on the domestic economy would amount to tens of billions of CZK. “If Brexit came in March, then this year, the total reduction in exports could amount to 30 billion crowns,” says the Confederation´s spokesperson Eva Veličková.
Also, the Chamber of Commerce points out that some businessmen are unlikely to be aware of the overall threat of Brexit. “For example, firms supplying components to Germany, where they are further processed and subsequently re-exported as new goods to the UK, would be hit by a hard Brexit. The question is whether all these companies are prepared enough for possible new conditions,” Chamber of Commerce spokesman Miroslav Diro said.
However, the Ministry of Finance assumes that the impact will be rather a one-off and, in the longer term, adjusting the exchange rate and increased demand for domestic production at the expense of import should help the economy.
