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January 18, 2019 www.intellinews.com I Page 4
Meanwhile the EBRD forecast that, “Unless other member states increased their contributions to the EU, Brexit would lead to a 10 to 15 per cent decline in structural and accession funds avail- able to countries in central and south-eastern Europe, amounting to a reduction of up to 0.4 percentage points of GDP in EU-supported invest- ment.”
A proposal issued by the European Commission in May 2018 indicates that Poland and other Cen- tral European members of the European Union will have to deal with severe cuts in the EU’s cohesion funding in the next EU budget. While it will be up to EU leaders to decide on the budget, the proposal reflected both the financial reali- ties post-Brexit and a shift in the EU’s spending priorities. While previously cohesion funding had been allocated primarily on the basis of GDP per capita figures, the Commission now proposes to reduce the weight of that criterion to fit criteria like youth unemployment, climate, education level, and the reception and integration of mi- grants.
Going east
The future of the estimated 3.5mn EU citizens who settled in the UK over the past decade re- mains uncertain, and it is hard to predict what Britain crashing out of the EU would mean for their lives. This is especially a concern the more recent arrivals from newer EU entrants Romania — the source of around 400,000 immigrants — and Bulgaria.
In terms of their home countries, this in turn cre- ates uncertainty about the future of remittance payments from workers abroad, as many maintain close ties with relatives back home.
On the other hand, a Brexit that fails to secure EU migrants’ future in the UK — and thousands have already left amid a toxic combination of uncer- tainty and anti-immigrant sentiment — could be
a blessing in disguise for countries in the CEE region as migrants return home. Countries across the region face tightening labour markets amid
the ongoing economic boom and (in several cas- es) declining combinations.
Back in 2016, real estate firm Colliers Interna- tional forecast that citizens of CEE would “boo- merang” home after the UK’s exit from the EU, thus hiking GDP across the region and provide a corresponding boost for local real estate markets. Together with the uncertainty surrounding their status in the UK, the weakening pound, Colliers anticipated, would "prompt a wave of workers in Western Europe to return to CEE-6 countries". To some extent this has already been seen in the run up to the Brexit deadline, with British businesses especially in the agricultural sector, reporting worker shortages.
On the other side of the coin, the governments
of the Czech Republic and Poland are reportedly preparing emergency legislation to allow British citizens in the two countries to stay in case of a no deal Brexit.
Not only people but some companies too could start moving eastwards, as UK companies seek
to keep a foothold on the continent. “While larger businesses focus on Frankfurt, Paris, and Am- sterdam, smaller financial firms are turning to CEE,” said a comment from public policy research institute the Center for European Policy Analysis (CEPA) on January 9.
It identifies emerging fintech hub Lithuania as being particularly successful in attracting British companies by making it easier to obtain a bank- ing license. According to CEPA, eight UK fintechs now have hubs in Lithuania — among them is fast growing London-based Revolut that received its European banking licence from the Bank of Lithu- ania in December.
Aside from Lithuania, CEPA singles out Poland as “becoming more competitive because of its low operating costs” as well as Estonia “for its im- pressive talent pool in engineering and IT”.
And in the Czech Republic, Japanese car producer