Brexit for Spain: many problems and one opportunity

(*) Published on 27/6/2016 in The Diplomat in Spain.

At the moment, David Cameron must be regretting the  promise of referendum he made  in January 2013 and that has only allowed him to enjoy 13 months of absolute majority.  This decision has not only made him fall, it also threatens to trigger an internal  battle of unpredictable consequences in the Conservative Party. It has also polarized the British citizens unnecessarily  and has put at risk the United Kingdom’s territorial integrity and the future of  the community project.

Beyond that,  there are specific implications for Spain. The  predictable volatility of markets has hit the Spanish selective index especially  hard, which lost 12.35% on Friday, a number that compared to the 3.1% lost by  the British index is even more striking. Besides, the fear of the fall of the pound  (right now to barely €1.23) having an impact on tourism, given the loss of purchasing  power of the British, seems to be founded. Only in 2015, 15.67 million British tourists  came to Spain, which means 21.6% of the foreign visitors.

There is also  a considerable uncertainty facing what the Brexit can mean for other aspects of  the close economic relations between both countries, such as investments and exports.  Let us not forget that the United Kingdom  is the first destination country for Spanish investments, whereas the British  are the fifth investing the most in Spain. Let us not forget either that, in 2015,  the United Kingdom was the fourth destination for Spain’s exports, as well as its  sixth supplier.

“Spain, as fourth country of the EU, will have to co-lead in the collective process of reflection more actively”

Regarding medium-long  term effects, these will depend, to a large extent, on how tidy the British exit  is (if it takes place, since there are voices asking for a second referendum, and  much debate about whether Westminster, with pro-Bremain majority, must accept the  Brexit or new elections must be called). The other key element will be the agreement  reached with the European Union in the end. Now, of course, Spaniards living in  the United Kingdom (according to official data, around 200,000) and British living  in Spain (more than 300,000) will see how their legal situation does not change  at all until the Brexit is put into effect (at least 2 years since article 50 of  the TEU is set in motion, which will be in October at the earliest).

Once the Brexit  takes place, it will have to be analyzed what is the new framework of relations between the EU and the United Kingdom, if  there is one by then. Nevertheless, imagining a situation in which an agreement  is not reached by then, the specially interwoven relationship between Spain and  the United Kingdom makes recommendable to find alternative ways, even if it is bilaterally,  since to that already expounded we would have to add the hardly solvable contentious  of Gibraltar.

However, apart  from all those problems, which are not minor, the shock forces to reconsider the  European project. That is an opportunity for a country like Spain, which must form  a government fast to be in the vanguard of the integration project. Spain is going  to become the fourth most important country of the EU and it must assume the responsibility  of co-leading the collective process of reflection, in a much more proactive way  than until now. There is no time to lose, as proved by the recent meeting in which  only founding countries participated. There are no excuses to, in the immediate  future, exclude Spain from any initiative to talk about the Europe of the future.

Salvador Llaudes
Analyst, Elcano Royal Institute
| @sllaudes