Analysing the impact of Brexit on trade and identifying export market potential Michael Gasiorek InterAnalysis

Possible impact of Brexit on trade: How might trading relations change Associated risks and opportunities Mitigating against the risk © InterAnalysis Ltd 2016

Trading relations will change with: The EU The World Trade Organisation 50+ countries the EU has FTAs with The countries the EU is negotiating with Those the UK may want to sign agreements with: USA, China, Japan, India, Aus… 1: includes: Canada, Singapore, Malaysia, Vietnam, Thailand, Indonesia © InterAnalysis Ltd 2016

So what are the risks? Direct impact on exports or imports from: Changes in tariffs Changes in regulatory requirements or in documentation needed for conformity assessment Rules of Origin Indirect impact on investment © InterAnalysis Ltd 2016

How big are the risks? The EU: CU v FTA v MFN are very different 44% Export share Import share The EU: CU v FTA v MFN are very different 44% 54% 50+ countries the EU has FTAs with Countries the EU is negotiating with1 Those the UK may want to sign agreements with: USA, China, Japan, India, Aus… 1: includes: Canada, Singapore, Malaysia, Vietnam, Thailand, Indonesia © InterAnalysis Ltd 2016

How big are the risks? The EU 44% 54% Export share Import share The EU 44% 54% 50+ countries the EU has FTAs with 14% 12% Countries the EU is negotiating with1 Those the UK may want to sign agreements with: USA, China, Japan, India, Aus… 1: includes: Canada, Singapore, Malaysia, Vietnam, Thailand, Indonesia © InterAnalysis Ltd 2016

How big are the risks? The EU 44% 54% Export share Import share The EU 44% 54% 50+ countries the EU has FTAs with 14% 12% Countries the EU is negotiating with1 2% Those the UK may want to sign agreements with: USA, China, Japan, India, Aus… 1: includes: Canada, Singapore, Malaysia, Vietnam, Thailand, Indonesia © InterAnalysis Ltd 2016

How big are the risks? The EU 44% 54% Export share Import share The EU 44% 54% 50+ countries the EU has FTAs with 14% 12% Countries the EU is negotiating with1 2% Those the UK may want to sign agreements with: USA, China, Japan, India, Aus… 25% 23% 1: includes: Canada, Singapore, Malaysia, Vietnam, Thailand, Indonesia © InterAnalysis Ltd 2016

Assessing the risk for your industry: Where do you currently export to? Is there a risk that Brexit will lead to changing market access? There is a big difference if you are exporting to: Germany (part of the EU), Korea (Free Trade Agreement), or the US © InterAnalysis Ltd 2016

Assessing the risk for your industry: Where do you currently import from? Could Brexit increase your import costs Will you need to satisfy rules of origin? Big difference between importing from: Germany (part of the EU), Korea (Free Trade Agreement), or the US © InterAnalysis Ltd 2016

Take the “vehicle” industry as an example… © InterAnalysis Ltd 2016

© InterAnalysis Ltd 2016

© InterAnalysis Ltd 2016

How big are the risks? The EU 44% 85% Export share Import share The EU 44% 85% 50+ countries the EU has FTAs with 9% 7% Countries the EU is negotiating with1 3% 1% Those the UK may want to sign agreements with: USA, China, Japan, India, Aus… 33% 6% 1: includes: Canada, Singapore, Malaysia, Vietnam, Thailand, Indonesia © InterAnalysis Ltd 2016

How big are the risks? © InterAnalysis Ltd 2016

How big are the risks? © InterAnalysis Ltd 2016

How big are the risks: tariffs © InterAnalysis Ltd 2016

Mitigating against the risks: In which markets have UK exports gone up? Are these markets where demand has gone up Has the UK done better or worse than the change in demand In which market have UK exports gone down? How are these changes related to changes in demand © InterAnalysis Ltd 2016

Looking at changes in vehicle exports: Comparing 2011 with 2015 % Change in the UK’s exports to each country Negative Positive % change in World demand in each country RETREAT DECLINING STAR MISSED OPPORTUNITY RISING STAR In this cell both UK exports grew and world demand grew © InterAnalysis Ltd 2016

Looking at changes in vehicle exports: Comparing 2011 with 2015 % Change in the UK’s exports to each country Negative Positive % change in World demand in each country 17 1 31.7% 1.2% 8 24 21.1% 46% This is the no. of countries where both UK exports grew and world demand grew © InterAnalysis Ltd 2016

Looking at changes in vehicle exports: Comparing 2011 with 2015 % Change in the UK’s exports to each country Negative Positive % change in World demand in each country 17 1 31.7% 1.2% 8 24 21.1% 46% This is the no. of countries where both UK exports grew and world demand grew This is the share of UK exports going to those 24 countries © InterAnalysis Ltd 2016

Looking at changes in vehicle exports: Comparing 2011 with 2015 % Change in the UK’s exports to each country Negative Positive % change in World demand in each country 17 1 31.7% 1.2% 8 24 (19) 21.1% 46% (41.4%) This is the no. of countries where UK exports grew by more than world demand This is the share of UK exports going to those 19 countries © InterAnalysis Ltd 2016

Looking at changes in vehicle exports: Comparing 2011 with 2015 % Change in the UK’s exports to each country Negative Positive % change in World demand in each country 17 1 31.7% 1.2% 8 24 (19) 21.1% 46% (41.4%) In this cell world demand has grown but UK exports have decline = MISSED OPPORTUNITY © InterAnalysis Ltd 2016

Looking at changes in vehicle exports: Comparing 2011 with 2015 % Change in the UK’s exports to each country Negative Positive % change in World demand in each country 17 1 31.7% 1.2% 8 24 (19) 21.1% 46% (41.4%) The eight countries are: Greece Portugal Finland Norway Turkey Japan Australia China In this cell world demand has grown but UK exports have decline = MISSED OPPORTUNITY © InterAnalysis Ltd 2016