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Commentary | 29 June 2017

Brexit and its Impact on British-Polish Relations

Image of Janusz Onyszkiewicz

Janusz Onyszkiewicz |Former Defence Minister and Chair, Executive Council, Euro-Atlantic Association (Poland)

Brexit Economy EU Poland United Kingdom Euro-Atlantic Security

After Brexit, the European Union project will never be the same. The British departure will deliver a hard blow to EU ‘soft power’ and challenge the widely held conviction that the process of European integration is an inexorable progression. Not only must the EU manage its internal political and economic problems as well as improve citizens’ perceptions of the EU, but it now must also manage the Brexit process. For individual member states, such as Poland, there may be additional negative consequences brought about by the UK’s decision to leave the European Union.

On the issue of Brexit, one of the critical issues that concerns Poland is the future of the nearly one million Poles working in the UK. If they are forced to leave and return to Poland, there are likely to be serious political and economic repercussions both for Poland and for the UK.

First, it may vastly increase unemployment in Poland which, at present, is at an acceptable level. Second, Poland receives around 1 billion euros in remittances from the emigrants, which amount to roughly 1% of its annual GDP. Approximately €250 million of this comes from Polish migrants residing in the UK. An increase in unemployment, coupled with a reduction in remittance payments, would be harmful to Poland’s economy. Furthermore, the Polish diaspora residing outside of the country generates significant demand for Polish goods, principally agricultural products. In the scenario where large group of Poles leave the UK, this may reduce the demand for Polish exports, again negatively impacting Poland’s economy.

There are also detrimental effects to the UK. First, the British economy depends on Polish workers to keep several sectors of its economy running effectively. Poles are mainly employed in the construction and trade industries as well as in other low skilled sectors, including parts of hospitality and in housekeeping. More than 40,000 Poles, some living in the UK and some in Poland, opened or registered their small businesses in the UK. It is highly unclear what will happen with these after a drastic Brexit divorce. After Brexit, studying in the UK will likely be prohibitively expensive for young Polish students, deterring them from pursuing higher education in the UK. British universities will suffer from the reduction in student numbers, and of course student fees.

On bilateral UK-Polish trading relations, Brexit presents an additional negative factor. After Germany, the United Kingdom is Poland’s second biggest trading partner. Polish exports exceed 12 billion euros annually from automobiles, spare parts, household appliances and food. Poland also imports just under 5 billion euros worth of goods from the UK. There is currently a healthy trading surplus which will be harmed by the UK leaving the Union.
Lastly there will be a negative effect on the budget. The British contribution is nearly 13 billion euros of which 6 billion is returned to Britain through its pre-arranged rebate as well as from the EU’s Structural and Investment Fund. This means that the UK’s net contribution is in the range of 7 billion euros. Poland is the biggest recipient of EU agricultural subsidies as well as its structural cohesion programs. Many projects have been initiated under the assumption that funding is already secure in the budgetary perspective 2020. Serious reductions of contributions resulting from Britain’s withdrawal may dramatically affect many projects already under way in Poland.

The prospect that Brexit could take place without any agreement, even a transitional one, may create disturbances unacceptable to member states. Mrs. May’s idea that “No deal is better than a bad deal,” is concerning. On the other hand, in Labour Party electoral manifesto we read that “ a Labour government will immediately guarantee existing rights for all EU nationals living in Britain and secure reciprocal rights for UK citizens who have chosen to make their lives in EU countries.” and: “Labour recognises that leaving the EU with ‘no deal’ is the worst possible deal for Britain and that it would do damage to our economy and trade. We will reject ‘no deal’ as a viable option and if needs be negotiate transitional arrangements”. The outcome of the recent parliamentary election did not give a clear mandate to carry out the Brexit negotiations according to Conservative concepts. Hopefully some ideas from the opposition approach will be adopted and recent proposals of Prime Minister May regarding the EU nationals working in the UK may indicate a hopeful shift in this direction.

Despite potential serious economic negative outcomes and problems with Poles living in the UK, Brexit, however regrettable, is not seen as a total rejection of Europe by the British and certainly would not require a kind of a „punishment” to discourage the others to follow British example. To begin with, there are no other countries waiting to see how Britain would manage the divorce to do something similar. On the contrary, the attraction of the EU membership seems not that much affected by Brexit. In Poland the mood may be described as of sad, but cautious optimism.

What is a very serious concern is the future of the European foreign and security policy. After all Britain was the strongest military power with tremendous experience, expertise and capabilities. There was an opinion in Poland that at least with regard to the policy regarding Russia, we could always count on the British understanding and support: especially visible regarding UK stance of the EU’s policy of sanctions on Russia. Without Britain in the EU, things will be more difficult. We should then perhaps develop, for our own purposes, a well-known British ability to “muddle through” present and forthcoming difficulties.

The opinions articulated above represent the views of the author(s), and do not necessarily reflect the position of the European Leadership Network or any of its members. The ELN’s aim is to encourage debates that will help develop Europe’s capacity to address the pressing foreign, defence, and security challenges of our time.