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Brexit will be so painful no one will follow: Finland

Apr 21 2017 14:20
Bloomberg: Kati Pohjanpalo and Raine Tiessalo

Helenski - Britain’s departure from the European Union (EU) sets a precedent. But not in the way you might think.

Instead of showing other EU members that it’s possible to exit the bloc, Brexit will make clear just how economically agonizing the process is, and frighten others away from ever considering a similar path, according to Finland’s Finance Minister Petteri Orpo.

"This divorce, after 40 years of marriage, is inevitably going to be so painful that no one will want to feel it for themselves," Orpo said in an interview at his office in Helsinki.

"I believe it’s going to be a precedent no one will want to follow."

One of the most contentious issues concerns a €60bn "Brexit bill" that Britain will be expected to settle before it can divorce the EU. Michel Barnier, the EU’s chief Brexit negotiator, says it’s not about "revenge" or "punishment."

"We don’t want to ask the Brits to pay a single euro more than" their legal commitments as a member state, Barnier said during a visit to Copenhagen on Friday.

Danish Foreign Minister Anders Samuelsen said in a brief interview on Friday that failure to sort out the UK’s financial obligations to the EU as a first step would mean the whole process would be at risk of going "horribly wrong."

He reiterated the EU’s stance that all other bilateral talks need to wait until the so-called divorce bill has been settled.

The UK’s determination to move ahead with Brexit is creating unity among the 27 nations that will remain in the bloc, and making them "more decisive" than they were before, Orpo said. "If that spirit remains, it will take Europe forward."

The EU that emerges from the disruption of Britain’s departure may well function better.

Finland could accept a so-called two-speed Europe, in which groups of countries would deepen integration at varying paces for different issues within the EU treaties, instead of the current system of a one-size-fits-all model with the occasional opt-out, the minister said.

"There should be no slowdown in developing the EU because of Brexit," Orpo said. "Quite the opposite, we should push even harder."

No one knows the economic cost of Brexit. The pound has lost almost 10 percent since the UK voted in June 2016 to leave the EU. Accelerating inflation is hurting consumers as imports grow more expensive, while businesses wonder how to plan investments given all the unknowns.

The International Monetary Fund said this week initial signs that Britain is coping economically will probably give way to a weaker outlook in the future as the cost of its departure from the EU filters through.

The real political negotiations on Article 50 will start after the UK has held parliamentary elections on June 8, European Commission President Jean-Claude Juncker said on Wednesday. A two-year timetable is possible, UK Prime Minister Theresa May said.

Orpo said everyone loses if the talks drag on. Finland, the only euro member in the Nordic region, considers itself a "close partner" of Germany when it comes to allegiances in the EU, he said.

"I don’t think that’s bad policy," Orpo said. "As finance minister, the policy Germany is pushing as Europe’s largest economy; it’s been very suitable for us."

Meanwhile, Finland is grappling with its own internal divisions as The Finns party, whose chairperson Timo Soini is stepping down, will select a new leader this summer. The two main contenders are both euro-skeptics.

Sampo Terho, considered the more moderate of the two, said on Friday that it’s "possible, or even likely," that Finland will leave the euro in the 2020s, 2030s or 2040s.

The Finns, which is part of a three-party ruling coalition in which Soini serves as foreign minister, will select a new leader on June 10.

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uk  |  brexit  |  world economy

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