The outcome of Brexit is of great importance to Luxembourg. Great Britain is a major trading partner with close ties existing between the two countries. Could Brexit actually benefit the Grand Duchy?
(miz/ADW) - The outcome of Brexit is of great importance to Luxembourg. Great Britain is a major trading partner with close ties existing between the two countries. Could Brexit actually benefit the Grand Duchy?
A new report just released by KPMG demonstrates these close relationships with Luxembourg, as well as other countries holding similar ties with the United Kingdom – Ireland, Malta and Cyprus. All four countries are closely monitoring the consequences of the British Brexit decision.
Georges Bock, head of KPMG's tax department, explained that Luxembourg could benefit from Brexit. "Between Great Britain and Luxembourg there is an important freight and service market, and we will therefore try to maintain the business with the City, if not expand it," he stated.
He is confident that an expansion is definitely possible: "the British will need a place in Europe to continue to offer their services." Since close ties with Luxembourg already exist, the country would certainly be a good choice.
If the situation actually developed, Luxembourg could even emerge as a winner from Brexit.
Criticism of CNBC report
Bock criticised a report made by American news and finance TV station CNBC, which interprets the KPMG report as Luxembourg, Cyprus, Malta and Ireland being the biggest losers of Brexit.
"This is not true," says Bock. CNBC misinterpreted the report as KPMG merely explained that countries such as Luxembourg or Malta have close contacts with Great Britain and therefore have a particular interest in Brexit developments.
Less dramatic for STATEC too
Luxembourg's statistics bureau, STATEC also views the Grand Duchy's situation less dramatically than CNBC.
They pointed out a few weeks ago in a study that Luxembourg's exports of financial services could drop by 4% by 2020 to around 350 million euros. The turnover of the Luxembourg financial sector would decline by two and a half percent and the gross domestic product could shrink by just under one percent.
However, according to STATEC, the Grand Duchy could also benefit from Brexit. If Great Britain were to lose its access to the European internal market, the City's stakeholders would have to move some of their activities to another member state.
As the Luxembourg financial centre specialises in investment funds and asset management, there are good opportunities to attract further activities from London.
Financial companies, such as the US companies Blackstone or Carlyle, have already announced plans to move to Luxembourg post-Brexit.