On 23 June 2016, 51.6% of UK citizens, which voted on the so called “Brexit” referendum, chose to leave the European Union.
In the very first hours after the referendum results, opinions of economists seemed to indicate that this choice would have caused an immediate catastrophe in the European markets and economy.
Some months later, however, we can assert that such declared catastrophe has not happened.
The UK Parliament authorized Brexit only on 13 March and, after the Royal Assent, the UK notified its decision to the EU on 29 March 2017, thus activating art. 50 of the Lisbon Treaty.
The procedure will likely take a long time, since the UK Government and the EU Commission will have two (extendible) years to negotiate an agreement.
In any case, it seems certain that, at least as regards Italian companies, the exit of the United Kingdom from the EU will not have the initially speculated dramatic consequences.
In fact, Italy is one of the less vulnerable EU countries to Brexit, according to Standard&Poor’s Brexit Sensitivity Index: Italian export to the UK amounts to 1.6% of GDP and direct investment in the UK only to 0.2%.
Moreover, according to a study carried out by Intermonte Advisory, the exposure of Italian companies is moderate and limited to few companies: in FTSE Mib, only three companies export to the UK for over 10%.
The actual impact will certainly depend on the outcome of the negotiation with the EU, but it can be reasonably presumed that a decrease in export due to duties or to a contraction of UK internal demand will not have dramatic effects on the Italian economic system.
On the contrary, for some aspects Brexit could represent an opportunity.
Considering that the banking, insurance and air transport industries are mainly governed by EU regulations and authorizations, the concerned entities established in the UK may need to move to another EU Member state to keep their European “identity” and carry on their activities.
In brief, many entities will have to move from London to another country, and Italy could represent a valid destination.
If the country is able to have the right stability and implement targeted initiatives to increase its attractiveness, there is no reason why the “new City” cannot be Italian.