It’s not only the UK that is predicted to be hit economically by the Brexit decision. The move to leave the EU is likely to have an impact upon all those countries who currently trade with them. This can already be seen in the Valencian community. A recent BBVA research report has identified the slowing down of growth in the region and has linked this, at least partially, to Brexit.
The predictions were announced by the head of Macroeconomic Analysis BBVA Research, Rafael Doménech during the presentation of the report Situación Comunitat. It’s not just Valencia’s reliance on the tourist industry or holiday home purchase either. The Valencian community currently exports more vehicles to the UK than the other communities in Spain.
Some good news
The gloomy news about Brexit was however, softened by other more positive news about overall growth in the region and an increase in employment. Tourist figures are up, the price of oil is down and exports from the region have been growing with an increase of 14.5% between January and July this year.
Doménech reported that the Valencian economy will still register with a growth of 3.3% at the end of 2016. This figure is projected to be lower than in 2015 when the rise was 3.6%. Projected figures for the end of 2017 are that there will be only 2.2% of GDP growth towards the end of 2017.
These faltering increases have been trickling down to unemployment figures too. Between 2015 and 2016 the region has created 105,000 new jobs with subsequent benefits to domestic income and spending.
The report acknowledges that Brexit isn’t the only reason for the decline in growth and that there are other factors that are influencing it too. Contributing to the downward trend is that of the current instability in the political situation. With Spain still facing the possibility of a third general election, there are concerns that this is also impacting on GDP.
However, Brexit is believed to be a major trigger and the report concludes that Brexit will reduce GDP growth in the region by five tenths in 2017; higher than the Spanish average figure.
The slow down in the British economy and the depreciation of the pound are expected to reduce the attractiveness of Valencian goods and services, including tourism. Currently the UK receives about one-tenth of what Valencia exports and 20% of overnight stays in the region in 2015 were by British tourists.
Doménech’s speech continued by emphasising that what’s needed now is a smoother administrative framework to ensure continued growth. This requires a ‘fourth industrial revolution’ in the form of digital technology advances.