Effects Of Brexit On Czech Republic: Introduction ✓ Solved

Effects of Brexit on Czech Republic 2/5/2021 Introduction: I

Situated in central Europe, the Czech Republic is a country dominated by the export-based economy and is one of the major countries of central Europe. The UK leaving the European Union potentially affects the Czech Republic, particularly concerning exports to the UK and Czech nationals working in the UK and vice versa. This paper analyzes the potential impacts of Brexit on the Czech Republic, discussing economic impacts, human resource challenges, and the overall consequences for the Czech economy.

Economic Impact of Brexit

Analysts estimate that Brexit may result in a loss of approximately €55 billion in the Czech GDP, equating to a decline of around 1.1%. The most significant effects are expected in sectors such as engineering, automotive, and electronics. Despite this, the net impact on the overall economy is thought to be relatively low due to a smaller portion of exports being concentrated in the UK. According to Radio Prague International (2018), the UK was the 10th largest export market and the 5th largest outlet for Czech goods in 2017.

The Czech Republic faces challenges in finding alternative markets to channel exports. Czech firms have already started to feel turbulence due to the initiation of Brexit, with many reporting a significant decline in orders because of uncertainties surrounding post-Brexit regulations. A survey revealed that by 2019, 37% of Czech companies were looking for alternative markets, with potential options being Asia and Latin America. Furthermore, 29% of companies began hedging their financial transactions in GBP due to fears of exchange rate volatility (MPSV, 2021).

A specific example of a company affected is Škoda Auto, a leading automotive manufacturer in the Czech Republic. The company heavily relies on exports to the UK market, making it vulnerable to any changes in tariffs and trade regulations post-Brexit.

Human Resource Impacts of Brexit

Brexit has raised significant concerns over the residency status of British citizens living in the Czech Republic and Czech citizens residing in the UK. With thousands of expatriates in both countries, issues regarding work permits and residency have emerged. Analysts predict that approximately 40,000 jobs could be lost in the Czech Republic due to the changes (Gorel, 2020). Before 2021, the Czech government allowed UK citizens to maintain the same rights as EU citizens, offering a temporary reprieve while they adjusted to the new legal landscape.

Since January 2021, UK citizens have needed a work permit to reside in the Czech Republic, mirroring the new requirements for Czech nationals in the UK. Furthermore, both countries are facing complications regarding the mutual recognition of educational qualifications, pensions, and other agreements due to their previous EU membership status (KAFKADESK, 2019).

Political and Social Implications

The consequences of Brexit extend beyond economic and labor markets; they have significant political and social ramifications. The Czech Republic has traditionally aligned itself closely with EU policies and frameworks, and Brexit complicates this relationship. The loss of the UK as a key ally in EU matters creates a vacuum that could lead to shifts in Czech foreign policy.

Moreover, public sentiment towards Brexit in the Czech Republic has been mixed. While some believe that the UK’s departure might open opportunities for new trade partnerships, others express concerns about the potential negative economic fallout and the loss of stability that comes from being part of a larger economic union.

Future Considerations

As the Czech Republic navigates the challenges posed by Brexit, it must strategically explore new markets and partnerships. Adapting to the new landscape requires innovative thinking and proactive policies to mitigate the impacts. By enhancing trade relations with countries outside the EU and rethinking domestic industries, the Czech Republic can potentially offset some of the negative consequences of Brexit.

In conclusion, the economic and human resource impacts of Brexit on the Czech Republic are significant. The country faces potential GDP losses, job reductions, and challenges in maintaining trade partnerships. Moving forward, it will be essential for Czech policies to address these challenges effectively while seeking to harness new opportunities in a changed political landscape.

References

• Gorel, L. (2020). CZ – Brexit: U.K. Citizens Residing in Czech Rep. KPMG.
• Radio Prague International. (2018). How would a “hard” Brexit impact the Czech Republic?
• MPSV.cz. (2021). Brexit.
• KAFKADESK. (2019). The Final Countdown: Implications of a Hard Brexit on the Czech Republic.
• OECD TIVA (2011) and Rabobank (2017). Brexit – Impacts on the UK & trade.
• FT. (2020). Brexit timeline: key dates in the UK’s divorce from the EU.
• BBC. (2020). Brexit: The UK has officially left the EU - what happens next?
• ONS and Rabobank (2017). Foreign direct investment in the UK.
• UNCTAD. (2019). Global Investment Trends Monitor.
• BBC. (2016). Brexit – A “quick” overview.