The decision by the United Kingdom to leave the European Union will certainly affect the European economy and financial industry, but the extent of its impact will depend on the results of exit talks, which have not begun yet, a round table organised by the Zagreb Stock Exchange Academy said on Monday.
The UK's decision at a referendum in June to leave the EU, which is colloquially known as Brexit, "will certainly have a strong impact on the European economy and will lead to many changes and restructurings of the financial industry. However, the exit procedure and time frame have not been clearly defined, and the degree of uncertainty is high," said Zdeslav Santic, chief economist as Societe Generale Splitska Banka.
Sandra Svaljek of the Zagreb Institute of Economics said that the most vulnerable was the financial sector, because about 80 percent of all financial transactions in the EU were initiated in the UK. She also cited the chemical and car industries because of a high volume of trade in these sectors between the UK and EU countries.
Of the EU countries that might be most hit by Brexit, she mentioned countries with a high volume of trade with the UK, such as Ireland, the Netherlands, Belgium and Sweden.
"Croatia, whose trade with the UK accounts for only 0.5 percent of GDP, will not be negatively affected to any great extent. In tourism, the main channel of impact on Croatia will be the exchange rate, which might affect demand, but not to a large extent, because Croatia is still cheap for British tourists," Svaljek said.
Croatian National Bank vice-governor Michael Faulend said that central banks had immediately responded to neutralise the initial uncertainties of Brexit by maintaining low interest rates. "Low interest rates are having a favourable effect on the market, but the question is how long this will last," he said.