Brexit: Gianni Bitetti on possible no-deal scenarios

Economy - 28 February

Gianni Bitetti, partner at Bernoni Grant Thornton, has been interviewed by the magazine Economy about the possible implications and future scenarios in case of a no-deal Brexit.

With reference to the possible implications for the financial markets, according to Bitetti “no-one in the business world considered a ‘what if…’ scenario before the referendum. Not even in the financial industry. It is estimated that the British stock exchange will lose financial assets for up to 800 billion pounds, in favour of the rest of Europe: most players have already implemented specific Brexit plans.”

As far as the effects on EU regulations are concerned, Bitetti declared: “The topics regulated by EU provisions risk creating a regulatory bug, which would be a nightmare for business leaders, from intra and extra EU VAT to the postponed VAT accounting on imports procedure anticipated in case of a no-deal, to the countless increased compliance obligations to be expected in business relationships with the UK.”

Moreover, according to Bitetti, businesses are not ready and a further relevant topic is that of customs duties. “Italy is the second manufacturing country in Europe and the country which could suffer the worst impact of a hard Brexit. […] The hypothesis now being considered is that of applying duties based on the rules set forth by the World Trade Organization, of which the UK is member, regardless of its EU membership, while waiting for a renegotiation of the tariffs for each trade zone.”

“The factors coming into play are basically two: the possible protectionism the UK could apply on some Italian products and the category in which the UK will be included by the WTO and the UE, whether among ‘most favoured’ countries, with discounted tariffs and duties, or not. In any case, the WTO scenario will impact on prices, inflation and on the Sterling Pound, thus triggering a vicious circle with no clear winner.”