Finance Ministry Sets Up Brexit Situation Room

Notwithstanding official reassurances about Israel’s economic stability, Finance Minister Moshe Kahlon announced the creation of a round-the-clock “situation room” to monitor economic repercussions from the British exit from the European Union.

“We have a strong and stable economy that is prepared to deal with any scenario and challenge,” Kahlon said on Sunday.

Israeli Prime Minister Binyamin Netanyahu also sought to calm markets. “There is no direct effect on Israel apart from the fact that we are part of the global economy,” he said at Sunday’s cabinet meeting.

But jitters were evident, as Kahlon added that he was in close touch with Bank of Israel Governor Karnit Flug and Netanyahu, with whom he met over the weekend to discuss the Brexit.

The TA-100, representing the largest 100 companies trading on the Tel Aviv Stock Exchange, opened down about 3 percent Sunday, the first day of trading following the referendum.

The Finance Ministry’s Chief Economist predicted on Sunday that the impact on Israel’s capital markets would be comparable to that of the 2012 euro crisis, which saw a 6.5 percent drop in Israeli capital market indexes.

The effect on Israeli exports was estimated to be about 0.1 percent. On the other hand, the Brexit could be to Israel’s advantage. It could make an opening for Israeli exporters to compete with British goods in the EU and European procuts in the UK.

Meanwhile, David Quarrey, Britain’s Ambassador to Israel, was calm.

“I don’t think things will change very significantly between the UK and Israel,” Quarrey said, “because I don’t see any likely change in the desire on our part for a strong relationship with Israel based on trade, investment, security, cooperation, technology and science.”

He was not so sanguine about the possible effect of the Israeli relationship with the EU, however.
“We have been a friend of Israel in the EU and will be a friend of Israel outside of the EU but Israel’s relations with the EU in the future will have to be determined without Britain at the table,” Quarrey said.