According to Serra, Brazil loses little with Brexit.

247 - Interim Foreign Minister José Serra believes that the impacts of Brexit on Brazil will be limited. See below:

Brazil vs. Brexit. Let's move on.

By José Serra

The world watched with apprehension as the British people decided, in a referendum, to leave the European Union. Brazil respects, but does not celebrate, the news. The European Union project is the most advanced process of economic and political integration in existence. Built on the ashes of the Second World War, the economic integration that led to the formation of the European Union brought peace and prosperity to Western Europe for 60 years and made the transition of the countries of the former Eastern Europe to the world that followed the Cold War less traumatic.

The UK's exit shakes the relative pro-integration consensus that has prevailed in Europe for decades and encourages divisive forces on the continent. It increases uncertainty and will have a negative effect on growth in the UK, the European Union and the world economy, at a time when European countries, still weakened by the crisis that began in 2008, were seeking to resume growth.

The British Treasury estimates that there could be a long-term GDP decline of around 6% in the country. According to the IMF, the UK's GDP could grow less by 1,4% by 2019 if it maintains full access to the European market, and by 5,6% if it has to pay import tariffs without discounts. After all, foreign trade accounts for 59% of British GDP, and 45% of its exports go to Europe. Part of the financial sector, so crucial to the economy of London and the UK, could migrate to other European markets and, with less investment entering the country, interest rates could rise, putting pressure on the devaluation of the pound, since the current account deficit is 5% of GDP.

Successive studies have shown that immigration is beneficial to the UK economy, but fear of foreigners was one of the main motivations for those who voted to leave. The British believe that the percentage of foreigners in the population is many times higher than the actual figures. In other words, one of the main reasons that supposedly motivated leaving the EU is not based on reality.

The fact that misconceptions influenced the majority vote in the referendum does not diminish its importance. It is necessary to ask where they originate and how to combat them. In the 1940s, Karl Mannheim, one of the fathers of the welfare state established in the United Kingdom after the war, argued that one of the reasons that led to the collapse of liberal democracy and pre-war totalitarian regimes was the weakening of social solidarity. Today, it is necessary to accompany the advancement of global economic integration with mechanisms for social inclusion and the reduction of inequalities, as well as to unequivocally reject isolationist solutions. We trust that the European Union and the United Kingdom will know how to follow this path while calmly adjusting their relationship. After all, the difficulties that Europe faces with migrants and refugees will not be resolved by reducing its presence in the world. They require, in fact, increasingly supportive action with the nations and peoples of origin of the human flows of our era.

The economic effect on the European Union tends to be comparatively smaller, but the political impact is worrying. Excessively nationalist and xenophobic views could gain strength, leading to greater European isolation from the rest of the world. This is unlikely to happen, but the world will lose out if Europe bets more on isolation than on cooperation.

Brazil will not be directly affected much. The British market's share of our exports is small (1,52%). There is also an expectation that British investments will continue to seek opportunities here. The external situation of the Brazilian economy, with high reserves and a trade surplus, reduces the risks for Brazil. We suffer somewhat more from the short-term instability of the financial and exchange markets and from the negative medium-term impact on growth in the United Kingdom and the European Union. For our part, we will redouble our efforts to conclude the Mercosur-EU association agreement and strive to seek trade and investment agreements with the United Kingdom.

JOSÉ SERRA He is the Minister of Foreign Affairs.