Brexit to impact Morocco’s economy

Sunday 03/07/2016
British tourists walk on Jemaa El Fnaa square in Marrakech.

Casablanca - Morocco’s economy will be affected by the British decision to leave the Europe­an Union in both the short and long terms due to uncer­tainty in the EU market, a Moroc­can economic expert said.
With Britain planning to leave the European bloc, Rabat will have to negotiate new trade agreements with London as customs duties will be reinstated.
Rachid Boutti, distinguished vis­iting professor at Universidad of Las Palmas de Gran Canaria and professor at ENCG Agadir, said the most noticeable effect “is the jittery financial markets that are likely to affect trade in terms of im­ports and exports”.
“The Brexit is set to trigger a pe­riod of uncertainty in Europe and in turn will impact Morocco’s trade (with the European Union) and GDP (gross domestic product),” he said.
Morocco had a trade deficit of almost $200 million with the Unit­ed Kingdom in 2015, according to Morocco’s Exchange Office, with exports to Britain reaching $600 million.
About one-quarter of Morocco’s imports from Britain are passen­ger cars ($185 million) followed by petroleum products ($155 million). Morocco exports clothing, passen­ger cars and electrical equipment to the United Kingdom.
Moroccan Central Bank Gover­nor Abdellatif Jouahri said Brexit’s effects on Morocco economy would be “limited”. “Britain’s exit from the EU will certainly have a tsu­nami effect on Europe but will only impact the Moroccan economy by 0.1 point (of GDP),” he said.
The value of the British pound tumbled after the “Leave” vote. For Britons planning to travel to Morocco, the dwindling currency will affect their purchasing power in the North African country.
Morocco has enjoyed an ad­vanced status with the European Union since 2008. Several ad­vanced status objectives were re­inforced by an action plan formally adopted in 2013.
However, scenarios that are like­ly to affect Morocco’s economy are starting to emerge following Brit­ain vote to leave the bloc.
“Britain’s trade ties with Mo­rocco will remain unchanged if London negotiates with the 27 EU members its inclusion in the Eu­ropean Economic Area to obtain a status similar to the Norwegian one that includes the free move­ment of capital, services, goods and people,” said Boutti.
Brexit campaign leaders hope that Britain can still enjoy advan­tages of the EU internal market for business while denying EU citizens entry to the United Kingdom to al­leviate Britons’ concerns about un­limited EU immigration.
French and German leaders, however, ruled out this option.
“You cannot have the freedom of capital movement, the freedom of goods, freedom of services and then say, ‘When it comes to people, stay put!’ Well no, it doesn’t work that way,” said French President François Hollande.
German Chancellor Angela Mer­kel said: “Whoever wants to leave this family cannot expect to have no more obligations but to keep privileges.”
There is likely to be a decline in trade between Britain and Morocco with customs duties coming into ef­fect.
Boutti said Morocco will have to negotiate new trade agreements with Britain once Brexit takes ef­fect. The new deals might be more beneficial to Morocco’s agricultural exports since the British market will be free from EU quotas on agri­cultural products.
The EU funding of Morocco is likely to be affected in the long run by Brexit since the United King­dom’s net contribution to the EU budget, estimated at about $11.3 billion in 2015, will no longer exist.
Another sticking point is the open skies agreement Rabat signed with the European Union in 2006, which helped Morocco increase the number of tourist arrivals. Ra­bat will have to negotiate an agree­ment with London as the British travel market is vital to Morocco’s economy.
About 500,000 British nationals visit Morocco every year and there are almost ten daily flights between the two countries.