Macron Knows No-Deal Brexit to Hit French Economy Really Hard - Economic Analyst

The EU and the UK agreed to move the exit deadline to 31 October with a review in June, with French President Macron vowing to block a longer Brexit extension. Sputnik has discussed Paris' position, as well as the EU's potential economic losses after the UK leaves the bloc with Yannis Koutsomitis, a Belgium-based political and economic analyst.

Sputnik: What does this new extension, granted by the EU, mean for the possibility of a no-deal Brexit?

Yannis Koutsomitis: This newest extension terminates the risk of no-deal on Friday night and makes a no-deal Brexit on 1 July highly unlikely, as it is almost certain that the UK will take part in the European elections. The new critical landmark is now 31 October, and the possibility of a no-deal Brexit then is low but cannot be totally excluded, since there can be a change in the Conservative Party leadership and a new hard-Brexiteer PM may opt for a forced no-deal Brexit.

READ MORE: Let's Be Honest: Barring a Revolution, Brexit is Unlikely to Happen

Sputnik: How likely is Theresa May to amend her Brexit deal to convince lawmakers to ratify it? Do you think that her negotiations with Jeremy Corbyn will bear any fruit in this regard?

Yannis Koutsomitis: As the shadow Chancellor McDonald said yesterday, the government and Labour are still far apart in their views of a Brexit breakthrough. Ms May could consider a temporary customs arrangement, while Labour insists on a permanent customs union and a confirmatory referendum. DUP and Tory Brexiteer MPs still object to the Withdrawal Agreement and Labour has no incentive now to compromise and support Mrs May's deal.

Sputnik: At this stage, who would benefit from Brexit the most? When will Britain be able to start negotiating trade deals?

Yannis Koutsomitis: If there is a post-Brexit trade arrangement with the EU, Britain may not lose much of its international trade business. However, the UK financial sector will be hit hard if British political parties decide to go for a customs union since much of the EU-area business of the City will be disrupted and many financial institutions could opt to leave London.

Sputnik: What economic losses would the European Union encounter from Britain’s withdrawal from the bloc?

Yannis Koutsomitis: It very much depends on the type of trade agreement that the UK will decide to agree upon with the EU. A Single Market solution would involve minimal damage both for the EU and for Britain. A Customs Union model could temporarily damage EU's businesses, especially the Nordic and North Sea countries that have a large exposure to UK finance. A no-deal Brexit will be very negative for the whole EU, will hit growth prospects and jobs and may eventually force the ECB to implement a new monetary expansion programme.

READ MORE: Macron Says Brexit Delay Beyond 30 June Could Put EU at Risk — Reports

Sputnik: French President Emmanuel Macron has vowed to block a longer extension of Brexit. Previously, France said it could be affected by Brexit the most. Why is that and why is President Macron taking this principled stance on Brexit?

Yannis Koutsomitis: President Macron knows very well that a no-deal Brexit would hit the French economy really hard but he is prioritising his European Union ambitions higher. He considers the UK's participation in the European elections a serious problem because it would mean dozens of new Eurosceptic MEPs that will almost certainly stand against Macron's initiatives.

The views and opinions expressed in this article are solely those of the speaker and do not necessarily reflect Sputnik's position.