By Derek A. Issacs with reporting by Rania Ghanem and Shikrallah Nakhoul posted in businessnews.com.lb

Local business stakeholders expect little or no change from the UK’s decision today to leave the European Union (EU). The value of imports from the UK stands at $525 million (up from $305 million in 2006) with exports last year at around $40 million (compared to $30 million in 2006).

Mohamed Choucair, Chairman of the Federation of Chambers of Commerce, Industry and Agriculture said: “We do not expect any change in our bilateral trade relations.” He expects that the UK will maintain its trade agreements and will not impose custom duties on the local products entering its market.
Food industries including wine, preserves, and canned food are the main products exported to the UK. “We believe that the UK market will remain open for local products,” he said. Ziad Bekdache, Vice Chairman of the Association of Industrialists, said: “The euro will be impacted negatively.” He said that the decline in the euro will raise the prices of the country’s industrial exports, making them less competitive to products from European industries. Industrialists have already lost a lot of clients due to the previous slide in the euro exchange rate against the US dollar from $1.35 to $1.12.

Bekdache said: “Even if the UK withdraws from European trade agreements, it would be ready to sign bilateral agreements.” He said that the Government should act quickly to renew these agreements.

The level of the British pound fell to a low not seen for 30 years. Experts however expect it to level out in the coming days. Nagy Heneine, General Manager of automobile distributor Bassoul-Heneine sal said that there would be no impact on their company in the short term, even with the fall of the pound. This is because we pay for our purchases from the UK in currencies other than the pound, he said.

The company, which imports the Mini and Rolls Royce, believes that there could be an impact in the long run. This could be because the process of leaving the EU will take around two years to complete, and during that time this will involve many changes in laws and treaties with other countries.

Brexit is expected to have a positive effect on the country’s current account deficit. Marwan Barakat, Head of Research at Bank Audi, said that Brexit will strengthen the exchange value of the US dollar vis-à-vis other currencies, mainly the British pound and the Euro. This will lead to a decrease in the value of imports as expressed in dollars because the Lebanese currency is pegged to the dollar.

On the UK Government’s website, its ongoing message said that the UK aims to increase trade between the UK and Lebanon and to support UK businesses to invest in Lebanon. A source at the British Embassy in Lebanon said however that they are still waiting for a green light from the UK’s Prime Minister office before they can give a statement.

Lebanon imports goods from the UK that do not have locally manufactured equivalents, mainly engines for the local generator industry.

The UK will wait a minimum of two years to start enacting its own trade policy. All industrial exports will remain penetrating this market at the same pace.

By Derek A. Issacs with reporting by Rania Ghanem and Shikrallah Nakhoul