Evgueni Ivantsov: Brexit is a Turning Point and a Game Changer for the EU

Evgueni Ivantsov, Chairman, European Risk Management Council, UK, speaks at the 7th Limassol Economic Forum on Friday, October 21, at Four Seasons Hotel in Limassol, about the new political and economic reality in Europe.

His presentation discusses the new political and economic reality in Europe especially, in the last two years, where geo-political factors started to dominate the European landscape. Ukrainian and Syrian military conflicts, refugee crisis, political tension with Russia, terrorist attacks in several European countries, growing political populism and nationalism, all these have a negative impact on the economic and business climate in the EU counties.

The EU referendum in the UK has recently become the most significant geo-political event that will have long lasting global implications. Brexit can be treated as a turning point and a game changer for the EU. Now we are facing a new political and economic reality in Europe and we need to understand its risks and put in place a mitigating plan to minimize negative impact and ensure sustainable growth of European businesses.

Ivantsov explains that the UK could win the battle for a number of reasons. He says that the UK economy is one of the fastest growing economies in Europe, but on the other hand this advantage could disappear in 2017-2018, and with elections in EU countries (France, Germany and the Netherlands) taking place next year it could change the dynamics. Additionally, the British society is deeply divided over Brexit that limits the set of deals that UK can accept, and its economy is much smaller than combined EU-27’s and if there is no new deal, the costs to the UK of having to access the EU market on WTO terms are greater than the costs faced by the EU.

His arguments why the UK could not win the battle include the complexity of EU decision-making process when 27 counties need to balance their priorities, the inefficiency of EU bureaucracy and a poor track record of solving complex problems (e.g. Eurozone crisis, the refugees crisis). He added that the UK financial sector is very dependent on the EU market, and time plays against UK because UK would suffer more than EU if after 2 years since triggering Article 50 UK-EU negotiation fails.

Ivantsov said that Brexit means high uncertainty as we are entering a territory of tail risks, and proposed three elements for mitigating tail risks: Business strategy and risk appetite, Scenario analysis and stress testing and Crisis management.

Lastly, Ivantsov advised the audience to start building effective risk management framework now to ensure a sustainable business growth in Brexit era.

About

The Limassol Economic Forum, now in its 7th year, is the biggest conference on European and Global Economics held in the Eastern Mediterranean region. It has become a major platform of debate on political, economic and business issues in Europe and the world. The Forum engages political, academic and business leaders in a wide-ranging discussion that aspires to improve the state of the broader region and contribute to the worldwide economic debate. The Limassol Economic Forum aims to touch upon the main issues and challenges affecting the European and global economic agenda and to come up with reliable forecasts about the economic outlook.

The event is organised by IMH and INBusiness Magazine, in association with the LSE Alumni Association Cyprus and supported by the Cyprus Shipping Chamber and the Cyprus Chamber of Commerce and Industry. It is sponsored by Cyta, Deloitte, Andreas Neocleous & Co LLC and World Trade Center Cyprus. Cocktail Sponsor: Johnnie Walker. Communication Sponsors: Accountancy Cyprus, Gold Magazine, Alpha Cyprus