For businessmen in Brazil, the president of Eucatex, Flavio Maluf holds prominence because of his useful insight that can shed light on the impact of Britain’s Exit on Europe and the Brazilian economy. Flavio’s insight is also important considering his business and political contacts in the developing world. Interestingly, his company Eucatex has been providing environmentally sustainable construction products for more than half a century, which makes Flavio the best person to ask about potential trade deficits.
In the context of Britain’s exit, it is important to note that the immediate impact was very negative for the European Union and Britain. For instance, stock markets around Europe fell by almost 12 percent. The ripple effect was also evident by the fall of British Pound, which reached levels of 1985.
Commenting on the possible impact on Britain, Flavio Maluf was neutral in his stance as he suggested that Britain will be able to cope with the pressure because its economic contribution to the EU was almost double compared to the input it received. However, he cautioned that Britain may lose important human skills that are difficult to replace.
Similarly, he agreed that European Union will need to craft new economic strategies because Germany and France will absorb the negative economic impact. As Britain was one of the three major economic forces in the EU block, Germany is under immense pressure to step up due to a relative weak position of France. In the near-term, if Germany does not sustain added pressure, it can easily topple the entire EU block.
Regarding Brazilian economy, Flavio insisted that the impact may be positive. He claimed that Brazil will not be required to abide by the strict economic quotas and tax of the European Union. As such, local firms can also sign new bilateral agreements with individual British firms instead of the traditional strict policies. Signing such bilateral agreements will not make much difference because Brazil is not a major trading partner of Brazil, representing less than 2% of annual exports. Overall, the exit of Britain from the European Union should be seen in a good light by local businessmen.