The historic vote by the people of Britain to exit the European Union (EU), internationally known as “Brexit” will have some far reaching implications on the Caribbean region, according to Governor of the Eastern Caribbean Central Bank (ECCB), Timothy Antoine.
Speaking with reporters at the ECCB Agency Office in St. George’s last week Tuesday, Governor Antoine stated that the level of uncertainty surrounding Brexit is what brings negativity to the minds of those who may be affected.
The Brexit vote on June 23 has showed that 51.9% of Britons voted in favour of leaving the European Union.
Prime Minister David Cameron has announced that he is stepping down as uncertainty remains on who will be his replacement.
The incoming Prime Minister is expected to trigger article 50 of the Treaty of the European Union, which is the formal notification of Britain’s intent to withdraw from the arrangement.
Antoine sees as the first and most visible effect of the actions in Britain in favour of the Caribbean is the depreciation of the Sterling Pound.
“There is a little bit of good news in all this…if you have bills to pay in the UK right now, Pound Sterling, it’s cheaper because you have to find less EC to pay for the Pound because the Pound is lower. So that’s the good news. If you’re a student studying and you have to pay school fees, it’s cheaper than it was last week before the votes but if you are a pensioner in Grenada, relying on a UK pension…they would hurt because the currency has fallen, which means that they’re getting less money, when they convert their Pounds into EC, that’s a problem…” he said.
Antoine alluded to projection from the Washington-based International Monetary Fund (IMF) and others that the UK economy may contract or go into recession as early as next year due to the outcome of vote on EU membership.
“If that happens, that would likely affect our tourism, it’s likely to affect remittances, foreign direct investments and certainly if the UK pulls out of the European Union it will also affect grants.
“…The UK is one of the biggest contributors to the European Union and that’s where we’ve gotten grant money in the past. The UK is our biggest ally in the European Union as our former colonial master…we are likely to see a reduction in grants from the European Union.
According to the Grenadian-born ECCB Governor, London’s pull-out of the EU will also have an effect on the Economic Partnership Agreement (EPA) involving African, Caribbean and Pacific states.
“If the UK pulls out of the EU, the EPA no longer applies to the UK and our exports to the UK, it applies to the EU but not to the UK. We are going to find ourselves having to negotiate separate bilateral arrangement with the UK…those create a lot of uncertainty for us as a region and to the global economy,” he said.
Antoine added that the ECCB will be monitoring the situation very carefully and would try to take steps as far as possible to minimise the negative impact of Brexit on Caribbean economies.