Economist says Brexit ‘worst ever’ damage to Europe

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By Stelios Orphanides

Economist Marios Clerides said that the British referendum in which voters decided to leave the European Union was a blow for the EU, as well as its rules and its institutions.

“The Brexit sent the message that member states can enter and leave the EU as they wish,” Clerides told the Cyprus Mail on Friday. “What does it mean for a member state that you are bound by fiscal rules, when you can leave anytime you want?”

“It is the worst damage ever done to Europe,” he said. “We have experimented with exchange rates for currencies, introduced the euro as an irreversible story, then started thinking about a Grexit, and now we have a Brexit,” Clerides said, referring to last year’s scenario of Greece leaving the euro.

In the new situation that has resulted following the referendum, much will depend on “the deal which Europeans will strike with the British,” he said. He urged the Cypriot government to engage actively in the EU-UK divorce talks in order to safeguard Cyprus’s interests and singled out halloumi, Cyprus’s export champion.

As Cyprus is still in the process of obtaining a protected designation of origin (PDO) status for its halloumi and the UK raised an issue in the past, “now that the UK will no longer be in the EU we have to protect it in the new environment,” Clerides said.

Depending on the result of the exit talks, triggered by the outcome of the referendum, the EU and the UK could at some point resort to imposing trade barriers or even to a trade war, should they deem that the other side gets a comparative advantage as a result of diverging regulatory framework, he said.

“It will become more difficult getting an agreement in trade talks,” he said. “When every actor starts protecting his interests, things become more complicated”.

Following the Brexit, what Europe needs most is “defining a common European vision,” Clerides said. “European leaders will have to produce one. The problem is that we don’t have leaders, but politicians driven by various European sentiments”.

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