The British decision to leave the European Union is expected to affect not just that country, but the entire world – including Israel, and to prepare Israeli businesses to deal with the coming events, the Israeli Manufacturers Association is holding a symposium that will provide businesses with advice and assistance. The Association said that it had decided to organize the symposium in response to concerns by many businesses that had contacted the group.
The U.K. is one of Israel’s strongest trading partners. The European Union is Israel’s third largest trading partner, and Britain is Israel’s largest trading partner within the bloc. Although no policy changes have yet been implemented – and most are probably years away – businesses are not taking any chances, said the Association, and hence the need for an in-depth workshop on Brexit.
Opinions on just what the impact of Brexit will be on Israel have been mixed. According to Yaniv Chevron of the Excellence-Nesuah investment firm, “the decision to leave the EU is likely to impact the country’s economy in several ways, including on its local trade. Some 70 percent of Israel’s exports of about $4 billion a year is in pharmaceuticals, and 10 percent of the rest is in chemicals and aircraft,” he told Yediot Aharonot.
One issue that could be of concern is a likely renegotiation of trade agreements across the EU. Israel has such agreements independently with the U.K. and the EU, but chances are that some of those agreements will have to be changed in light of what is likely to be Britain’s extensive economic “divorce” from the rest of Europe. The extent and impact of that divorce is not likely to be known for years.
According to Alex Jabotinsky of the Meitav Dash investment house, Brexit could cause the European Union itself to dissolve, or at least be significantly weakened. “The euro is likely to fall sharply, and the exchange rates both within EU countries and outside the Union are likely to fluctuate wildly, as weaker countries like Italy, Spain and Portugal see investment and bond sales fall.” Once again, turmoil in Europe will send investors rushing to the dollar and to U.S. Treasury bonds.
“Israel could also be hurt, although less than other markets,” he said. “A deepening economic morass in Europe will affect Israel, as the EU is Israel’s third largest trading partner. The export sector, which is already suffering to some extent, will see its problems worsen,” he said.