After the Barcasit comes into effect, economist Azad Zangana of the British property management grant Schroders demonstrates optimism • In his estimation, UK-EU negotiations on trade relations will not take long

• Azad Zangana // Photo: Joshua Yosef

The official start of the Barcasit is a good newcomer to the British economy, although now the significant period of struggle and negotiation between the United Kingdom and the European Union for future trade relations between the two parties is beginning. This is what senior economist Azad Zangana, the British property management grant for Schroders, estimates in an interview with Israel Today.

"Since the December general election, we're seeing investors return to the UK, especially in the financial markets," Zangana emphasizes. "Some companies will continue to leave. But since certainty has been raised about the issue of the Barcasit, other companies can decide whether to leave or not on the basis of certain information, whereas in the past the decision was due to speculation. Not everyone will leave, there will be those who decide to stay. But in some sectors, especially investment banks, workers will continue to move to the EU because they will not be able to continue some of their operations here. Equally, Swiss banks positioned their large London headquarters because they could not operate from Switzerland. "

According to Zangana, one of the consequences of the Barcasit coming into effect is the loss of interest to the British public in what will happen from now on.
"In the past, we used to use betting markets to identify processes related to Barracks," says Zangana. "The only thing people have been betting on lately is whether or not the Big Ben will ring the Barracks night. This indicates that people are losing interest in the subject. Of course, financial markets and investors will continue to monitor closely what is happening in the UK economy and future relations with the EU. "

If so, what is changing now?

"The only real change is that the United Kingdom will no longer be an active member of the European Union, it will no longer have political power within the EU. If changes are made, the British will have to accept it without being able to block, negotiate or propose their own laws. That trade relations, customs arrangements and the free movement of people will remain as they were in the coming year. What will happen next depends on the outcome of the negotiations that will begin soon. "

Will one year be enough to formulate a new trade agreement between the parties?

"Depending on how ambitious the parties want to reach agreement. If you look at the negotiations between the Union and Canada and Japan, one and even three years are not enough. However, these are countries that come from different backgrounds and with different standards. The UK comes in complete compliance with the laws Union, and therefore negotiations should not be a big challenge.

"I believe that a general agreement can be reached by the middle of the current year. Once this agreement is reached, they can move to individual negotiations on the various sectors, in accordance with the British and EU priorities. The British government said it did not want to be a member of the common market and the customs union. Because it will require compliance with European rules and also because the union requires continued free movement of workers.The current British government does not want a big deal that will resemble the common market. They will try to go sector by sector - manufacturing industries: vehicles, chemicals, electric machines, with Priority to British export industries Because it is an area where several large countries in Europe that compete with the United Kingdom on the manufacture and supply of various products.

Photo: IP

"Each party has the option of rejecting negotiations in certain areas. By the end of the year, the government is likely to say: 'We have reached agreements in several dozen sectors, we will join them and call it a trade agreement,' and then announce the end of the transition year.

"The sectors that are excluded from the agreement may move to the rules of the International Trade Organization, or the government may request a further extension of the transition period for the sectors it wants to reach an agreement in the future. There are sectors that the UK does not want to reach a trade agreement at all. For example, financial services and services in general. Will be transferred directly to the International Trade Organization at the end of the year.

"As negotiations go low on a technical level and try to avoid the risk of failing to reach an agreement, I think the volatility we witnessed last year will not be repeated. This is important because it will allow the British economy to begin to recover. Businesses can start planning their operations again, And this is an urgent thing as the British economy has really struggled lately.

That is, the gradual decline in the disengagement process may prevent the state of negotiations from collapsing, which many still fear?

"Technically, this is still a possibility and so people are still worried, and rightly so. But the gradual approach significantly reduces the risk of breaking negotiations. In the end, the central goal of the government is to make the Barcasit a success. If they think a 50-sector agreement is a success, it will be so in the media. The transition period will end, and the Barcasit supporters will be happy. But if the talks are extended and the transition period is extended or no agreement is reached, markets will show concern. "

Johnson at the entrance to a historic cabinet on the occasion of the exit from the Union // Photo: Reuters

What could be the effect of the "Barcasit" on trade relations between Britain and Israel?

"The Union has a trade agreement with Israel, one of 40 trade agreements with countries around the world. The good news is that Israel was the first country that agreed to implement the rules of the trade agreement with the Union in the trade agreement with the United Kingdom. So we already have such a trade agreement that was before "I believe the UK will want to deepen and advance this agreement."

Do you recommend Israeli investors to invest in the British economy?

"We are looking at investments globally. At this point, there is still uncertainty about the British economy. While this is a risky situation, it depends on various figures. There are many considerations to consider. If investors are facing the choice between the UK and somewhere In the EU and their activity is mainly in the EU, it makes more sense to invest in the EU at this point. If their activity is focused on the UK or more globally, the UK will start to look more attractive. "

UK flag rebel from European Parliament building in Brussels // Photo: AP

There is an expectation from Germany that will assume greater political and economic responsibility after leaving the UK. Is the German economy strong and stable enough for this purpose?

"Not at this time. Once there is a change in leadership in Germany, we may see a clearer change in the style of Germany's interaction with the rest of the Union. Chancellor Merkel did a phenomenal job in Germany, but it was frustrating to see how long it took her to make decisions. Which slowed Europe in adopting the rapid changes that were required, but I think the Germans would try harder to lead Europe, they would have to.

"In the absence of the UK, the number of liberal economic countries in the Union will decrease. Countries that believe more in government intervention, such as France, will increase their impact on European policy. Therefore, Germany will have to step forward if it wants to influence the way Europe is run."