Jean-Pierre Petit, Chairman of the Green Economic & Financial Notebooks, previously held the position of Partner and Head of Economic Research and investment strategy of Exane-BNP Paribas. He has authored several books, including "La Bourse, rupture et renouveau", which won the Turgot Grand Prize in 2004 for the best book on financial economics. A journalist for BFM, LCI and TV5, he shared his views on Brexit last June, at the ACI Monaco's 25th anniversary (The Financial Market Association).
Brexit is a great subject of interrogation, if not for concern?
In this area, we lack historic references. In the whole of Britain's history there has only been one referendum on whether Britain should stay in the European Economic Community, and that was 40 years ago (in June 1975, with 67.2% of votes in favour). In the history of the European Union, only one entity has ever left, Greenland in 1985, under fairly unique circumstances. A departure with rather limited historic significance.
Its critics oppose the exorbitant cost of such an operation?
The cost to the British economy if it were to leave the EU depends largely, if not entirely, on the duration and conditions of the transition to new commercial agreements with the EU and other major partners (USA, China, etc.) and any possible uncertainties this may create, especially in terms of domestic and foreign investment. For the record, Greenland's departure was followed by 3 years of difficult negotiations with EEC authorities. A number of questions can also be raised concerning the possible negative impact of leaving the EU on the City, and more generally, on the financial services in Great Britain (around 30% of the GDP). There is also the risk that Scotland (nearly 8% of the British GDP) would quickly organise another referendum on its independence, leading to the dismantling of the UK. A new wave of uncertainty would arise with regard to Scotland's future currency, the distribution of the burden of debt between Scotland and the United Kingdom and how the North Sea oil reserves would be shared, among other things.
Would Brexit thus have catastrophic consequences for the economy of Britain?
Despite all this, we are puzzled by the negative, almost doomsday, scenarios that are being bandied about. We are confident in this economy's ability to adapt, thanks largely to its incredible flexibility. In this respect, we should bear in mind the passionate speeches made in the early 1990s on the cost to the UK if it didn't join the future single currency. Yet, since late 1992 when the Sterling left the European Monetary System, Britain's real GDP has grown by 68% compared with 42% for the euro zone. With regard to the City, we should bear in mind that it is in fact the only truly global financial centre in Europe. This is due to its size and the great diversity of stakeholders and transactions, as well as other factors (language, tax and legal context, market infrastructures, etc.) which are fairly unshakeable in our opinion and are barely affected by the UK's formal participation in the EU. It should be added that leaving the EU could result in gains for the British economy (smaller contribution to the EU budget, elimination of the European technocracy, etc.).
Would the major impact be for Western Europe?
By losing the United Kingdom, it would lose a major player: a member of G8 and G20, 3% of the world's GDP (in PPP), a major military and nuclear power, a member of the UN Security Council, the list goes on. Europe's internal and external credibility and capacity for action would be seriously affected. It would create a dangerous precedent, stoking pressure from "populist" movements and would probably stir up internal governance issues, like those related to the management of the migrant crisis.
