The British Exit (Brexit) from the political and economic alliance of the European Union (EU) is having an unprecedented impact on modern Britain. Every country, trade partnership and individual with ties to Britain will experience some consequence of this seismic shift in regional relations, whether negotiations result in a hard-Brexit or a soft-Brexit.
So, how is Israel likely to fair? Barry Grossman, British Embassy Director of International Trade, explains in a special column for Ynet, how Israelis can benefit from Brexit.
Post-Brexit doors open for Israel
Right now, Brexit has thrown the UK into turbulent and muddy waters. As crunch time approaches – with Britain scheduled to leave the EU at 11h00 local time on March 29, 2019, ready-or-not – it’s panic-time in Westminster and across the British Isles.
For Israel, Brexit is already presenting a number of benefits to Israelis and the economy. The reason, at this stage, is simple. As the UK leaves the exclusive club of the EU, it must seek out new political and economic alliances to take the place of those traditionally enjoyed as an EU partner. Already, Britain has begun to look further afield for new alliances, and one of the country’s that has caught its eye, is Israel.
A new Free Trade Agreement has been under negotiation between Israel and the UK since March 2017. As things stand, trade between the UK and Israel is governed by an Association Agreement between the EU and Israel. Post-Brexit, Britain
and Israel will be free to determine the best deal for the two countries outside the European Union.
Since almost 16 million Britons voted in favour of Brexit in 2016, the UK government has earmarked Israel as one of its priority markets. Keeping in mind that the UK is already Israel’s second largest trading partner, yielding more than $7 billion of trade each year.
A new Free Trade Agreement will open up the UK market to more Israeli exports, in both goods and services, and make a significant contribution to Israel’s economy. A knock-on effect is increased interaction between UK and Israeli companies which is likely to benefit the Israeli market in a number of ways – with greater product choice for the Israeli consumer, to name just one.
This does not mean that Israelis must wait for the finalisation of agreements between governments, by any means. A number of enterprising groups and individuals are proactively finding ways to benefit from Brexit – here’s how.
The Israeli consumer
Individual Israelis can benefit from Brexit thanks to a weaker GBP. Britain is a popular tourist destination for Israelis. Now with a fluctuating Pound Sterling – Israelis have at times, since the referendum, received 15% more for the Shekel – travel has become more affordable and attractive for the hundreds of thousands of Israelis who travel to Britain every year. This is reflected in a increasing number of flights between the two countries, which prompted the recent signing of a new aviation agreement between Israel and the UK.
Online shopping from British retailers, like Next and Asos, has also taken an upward swing as a result of more favourable Shekel-Pound exchange rates.
Israeli investment in British real estate and infrastructure
Israeli investors have been quick to recognise the advantages of investment in the British real estate market and infrastructure.
With the decline in Sterling’s value since the referendum, cheaper real estate offers attractive opportunities for Israeli investors who want capital growth and a high yield on investment. And it’s not only real estate that could benefit Israelis post-Brexit. Recently, the UK government launched its new Industrial Strategy that aims to stimulate significant investment in British transport and infrastructure. This could open doors for Israeli companies to broaden their investments in new markets. The last three years alone, have seen Israelis invest more than £300 million (1.4 billion NIS) in infrastructure projects in the UK.
Increasing opportunity for entrepreneurs
The UK is the sixth largest economy in the world with major opportunities for Israeli entrepreneurs to set-up operations in the UK or invest in British infrastructure and regeneration projects. In the year following the referendum, Israeli financial institutions invested over £150 million (more than 700 million NIS) in the UK.
Even before Brexit negotiations began, the UK was one of the easiest places to set up business in Europe – it takes as little as 24 hours to register a new company. The pace Israeli companies are setting up or expanding in the UK, has increased in the year following the referendum – 32 companies compared to 25 in the 12 previous months.
The UK government has been helpful in this area too. The British Embassy has organisation a number of Brexit information-gathering events that have helped hundreds of Israeli business people to learn how best to work with Britain in the post-Brexit year to come years. Britain has shown particular interest in Israeli companies that offer environmentally-friendly products or services – one of the UK’s post-Brexit priorities is to focus on energy-saving and environment concerns.
Britain needs new import partners
One of the biggest areas of Brexit impact is the movement of goods in and and out of Britain. Looking beyond the traditional European markets, Israel’s developed economy is a potential destination for British companies looking for new export markets. This is evident in the number of business trips to Israel since the Brexit referendum, by executives of major British companies like Marks & Spencer, Rolls-Royce, Top shop, and the Royal Bank of Scotland. On the other hand, the UK has much to offer in innovation and quality but has sometimes struggled to compete on price in the Israeli market. This, too, is changing with imports from the UK generally more competitive for Israeli consumers.
Israeli techies in demand
Since the referendum, the UK has increased the number of visas for skilled workers. This is likely to benefit the Israeli technology sector which could be in demand by companies recruiting skilled staff or tech services for their business projects in the UK. They would join dozens of other Israeli tech companies already active there.
How to prepare to benefit from Brexit
If there were still doubts about Britain’s efforts to romance Israel in preparation for Brexit, then the visit in June by the UK’s Prince William – the first official visit to Israel by a member of the royal family – should have convinced the last doubters that there has been a turning point in British–Israeli relations.
While Brexit's fate is in the hands of politicians and negotiators, how you choose to navigate these choppy waters is not. For Israeli investors looking to protect their portfolios or explore new ways to benefit from Brexit, there are a variety of strategies available. But before deciding how you can benefit, it’s important to first educate yourself about Brexit’s possible outcomes
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