Pages Navigation Menu

‘The harder the Brexit even worse would be the consequences for Spain’

The respected economist Luis Garicano fears the final divorce could be worse than expected

The professor at the London School of Economics Luis Garicano has confessed he has never come across anyone in favour of Brexit, which surprises him as a British resident. He considers this demonstrates ‘isolated and differing worlds’ between the urban elite and those who reside in small rural villages.

luisGaricano.jpg

Luis Garicano – Archive photo

Garicano argued during a conference organised by the Rafael del Pino Foundation that those in favour of leaving the European Union think ‘they will recover control’ for those who believe ‘Europe has been taking control of their lives’. According to the professor, such aspirations could put into danger the success of the negotiations in crucial areas which guarantee free trade and given many British people want to regain full sovereignty.

The continuation of Great Britain inside the single market is his main concern ‘the key obstacle is the jurisdiction of the European Court of Justice because a single market is necessary’, he argued, given ‘you cannot have a single market with different rules’. If no agreement has been reached by March 2019, a rupture could happen and Great Britain would have to return under the auspices of the World Trade Organisation, and establish rigid tariffs over commercial assets. Such a possibility he considers is ‘crazy’

He underlines ‘The harder the Brexit even worse would be the consequences for Spain’ in the ambit of the free movement of people, and the heightened risks for British and Spanish citizens.

It is calculated that a million Britons are living at least partially in Spain and 300,000 Spaniards in Britain. The impact over medical treatment could be very harsh unless an agreement is reached with health as the number one priority.

For Garicano the British Government is ‘playing with the lives of people’ by using questions such as exchange rates in the negotiations.

In trade, Spain ‘has a lot to loose’ given our country is trading with Great Britain with a balance of trade surplus of 1% of GDP. Our forth export market with 7% of the total. Regarding tourism, Spain welcomes 16 million British tourists every year, creating an enormous risk of a dramatic fall in numbers after a hard Brexit.

Regarding the free movement of capital, our integration is very strong. Great Britain is the main destination for direct investment from Spain. Large deals have become common. Ferrovial, for example, owns Heathrow the largest airport in England. Banks Santander and Sabadell have a large presence and Spain is now second largest investor for financial product in the UK, after the US.

British companies who have invested in Spain have converted their Anglo-Saxon country into the fifth largest foreign investor in Spain.

For Garicano, Spain and Great Britain have spent 40 years removing barriers, and the fear is ‘these barriers can return to bygone days with devastating consequences for both countries’

Lastly, he argues should the British want Gibraltar to remain in the single market , they should offer co-sovereignty. Not by demand but as the unique way for Gibraltar to remain a free trade zone if the United Kingdom finally decides to leave the United Europe.