Should Spanish businesses in Malaga be worried about the effect of a Brexit?

2016-07-08 08:00:00

On 23 June, the citizens of the UK will be voting in the referendum to decide whether or not their country should leave the European Union. The possibility of a Brexit and its consequences have stirred up British and European politics and raised major concerns in the economic sector. If the UK left the EU, would Malaga be affected?
Institutions and businesses here are not afraid but there is some uncertainty, because Britain is an important market for tourism as well as from a commercial point of view.
“Apart from being the biggest source market for tourists, the UK has traditionally been an important export market for Malaga province. The volume of trade in both directions amounts to nearly 250 million euros,” explains the president of the Cámara de Comercio (Chamber of Commerce) of Malaga, Jerónimo Pérez Casero.
According to figures for 2015, the UK is the sixth biggest market for exports from Malaga, after France, Italy, Portugal, Germany and the USA. In terms of imports, it holds second place after China. In Spain, the surplus with Britain is 1.1 per cent of GDP. The UK is the fifth most important destination for the export of Spanish goods and services.
So would commercial relationships change if Brexit were to happen? The Cámara de Comercio in Malaga isn’t sure, although Jerónimo Pérez Casero does say that any measure which goes against free trade would place a “restriction on the value of exchange” and would have a negative effect on transactions between countries.
“Nobody can predict which products would be most affected. It depends on many different variables, although drinks and agriculture and food products are the top three goods which we export to the UK; it would be logical for there to be some effect on this type of product, in a sector which is very important for the economy of the province,” he warns.
The highest demand for exports from Malaga to the UK is for fruit (over 18 million euros in 2015), followed by drinks (10.2 million). For Trops, the producer and retailer which is based in La Axarquía, the UK is one of its principal markets. Approximately 20 per cent of its avocado exports go to the UK and it is always among the top three countries in terms of sales abroad.
The director of Trops, Enrique Colilles, admits that there is some uncertainty but he is confident that his business could withstand a Brexit.
“We don’t believe we would be affected because we hold a dominant position in the market. But from a financial point of view, at the moment we work in euros with the UK and, obviously, if it were to leave the EU we would have to go back to using Sterling. So the exchange rate would be a negative factor because of the complications it would cause,” he says.
For Enrique, Brexit would oblige him to take out exchange rate insurance, “which would be an additional process and would make operations more difficult,” but it would not endanger the commercial viability of his products.
“It would be something like the way we trade with other European countries which are not part of the EU, like Switzerland. There, we operate with one method and we are fully adapted to it,” he says.
The managers of Dcoop, which exports olive oil, olives and a small quantity of wine, agree. However, the company’s head of Corporate Relations, Esteban Carneros, points out that Britain is not in the company’s top ten for exports.
“We understand that, a priori, it wouldn’t affect us, because we are not in competition with their own products. Our commercial relations shouldn’t be affected. Other food items, such as dairy produce and meat, could be affected more because those are also produced in the UK. In our case, if people there want to continue consuming olive oil or olives, they’ll have to buy them,” says Esteban, who also points out that preferential agreements could be signed, such as those with other countries outside the EU, such as Norway and Iceland.
There is greater concern among companies which have investments in the UK. The ICEX (Spanish Institute of Foreign Commerce) says Spain is consolidated as one of the UK’s principal foreign investors. Among the Malaga-based companies with a strong commitment to the British market is Aertec Solutions; it has an office in Bristol and 10 people based in the UK, working with different aeronautical manufacturers and in alliance with British engineers at several airports.
“Part of our work is linked to the Airbus programmes and that is a huge European company. There is a great deal of uncertainty in the UK about how Airbus would react to a Brexit, whether it would maintain its investment and jobs or not. The fact that there is uncertainty is already a negative factor. An uncertain future drives off investments which need several years to recoup, and in the aeronautical industry everything is done with a view to the long term,” warns the CEO of Aertec, Antonio Gómez-Guillamón, although he does say that he hasn’t really considered whether to withdraw from the UK if Brexit does happen.
“Curiously, within Europe, the UK is the country which is most open to other companies, the easiest with which to do business, with a more open mind and less administrative and cultural protectionism. Let’s hope they stay and the rest of Europe learns from them and their way of understanding economies, markets and companies,” adds Gómez-Guillamón.source surinenglish