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Four and a half years ago it happened that the British left the European Union decisively Brexireferendum and the transition period will end at the end of the year. We are aware of all the political decisions that affect Hungarians since then, including the rules for entering and leaving Britain, the conditions for studying abroad, working and settling.
Negotiations are ongoing Boris johnson British Prime Minister and Ursula von der Leyen , the President of the European Commission, on trade conditions between Great Britain and the European Union. Although it is not ruled out that they will be reached before December 31, it is increasingly likely that the long-awaited agreement will not be reached this year.
The parties must reach an agreement before December 31.
That is why the development of trade relations between Hungary and Great Britain is currently the same question mark, including British companies operating in Hungary, as well as orders from the island country.
Not to mention, according to the figures, the UK is one of Hungary’s most important trading partners. There is also no interest in how UK partners will adhere to GDPR and environmental principles in the future.
What will be the fate of British companies in Hungary?
Even if no comprehensive trade agreement is reached between the British and the EU for the time being, I still do not believe that British companies will leave Hungary en masse for this reason. Although there is no doubt that there will be aggravating factors nonetheless
He told the Index Peter goreczky, Senior Analyst at the Institute of Foreign Affairs and Foreign Economy (CCI).
The expert added, for this you have to see that
the UK is currently the sixth largest investor in domestic capital.
But British companies chose Hungary as an investment destination not only because of their common membership of the EU.
For example, the availability of professionals, favorable operating costs, as well as the industry ecosystem all play a role in one of those strategic decisions. Although the destination of the investments also depends on the role of the Hungarian subsidiary.
For example, if a British company serves the entire EU market from its facilities here, despite Brexit, there will not be much reason to relocate the distribution center or move production to another member state.
Explains Péter Goreczky, who mentions as an illustration of all this that the British pharmaceutical giant GlaxoSmithKline (GSK) announced in 2017 that it would expand its production plant for vaccine raw material in Gödöllő, which will allow the production of new products from 2023.
It also shows how much work, years of technology and business development, and official licensing process take place in the background when an investment of this magnitude is implemented. After that, these projects are not transferred to other countries so easily, recalls the main analyst of the CCI.
Zoltán GálikAccording to the associate professor at Corvinus University, despite the Brexit saga that has dragged on for almost five years, there is no need to fear British companies present in Hungary, as they have many possibilities to move forward and establish their subsidiaries and registered partners in Europe.
However, in the services market, it is a good question to what extent British companies with connections in Hungary and providing services from the UK will comply with the GDPR directives that will be binding on the European market in the future.
It is important, for example, that the data centers that store the data of European companies, organizations and individuals are located in one of the Member States of the European Union, in the absence of an agreement.
In addition to strict data protection, British practice, which is likely to gradually differ from regulation of the European single market, may also teach us a lesson in the future.
Suppose a Hungarian and a British paint manufacturer are competing with each other on the market. But the latter will not be required to comply with strict EU environmental standards, which makes the UK product cheaper. We can only allow this product to enter the common market if it cannot be dumped, so a quantitative restriction or customs duties should be imposed on it – Zoltán Gálik explained what trade dilemmas Brexit will pose for the coming months, possibly before us . standing for a few years.
What will happen to our orders from the UK?
Now when we order from a UK webshop we pay no less than € 22 at all, and on top of that we pay twenty percent VAT. All of this will cease with Brexit early next year, and
we have to count on 27% Hungarian VAT after orders,
which is a clear price increase – experts have drawn attention.
Of course, the picture is nuanced by the fact that, although we order from a British company, it is easy for the product to be manufactured at one of their logistics sites within the EU, that is, the goods do not actually arrive at Hungary from the UK.
For example, if we buy a product through Amazon that is produced in one of the EU’s free trade partner countries, it will be shipped to Hungary through a German subsidiary, so there will be no customs duties, unlike if the product comes from the UK.
– Zoltán Gálik outlined the possible Brexit scenario.
However, an associate professor at Corvinus University also finds it realistic that UK mail charges could be more expensive, as could mobile phone costs, as free roaming within the EU will not be available for the United Kingdom.
Hungary is the 10th largest export partner
If no long-term agreement is reached, the general guidelines of the World Trade Organization will generally define trade relations between Hungary and Great Britain, which will entail the application of additional customs duties and administrative burdens.
In other words, each member state draws up its list of tariffs and quotas that it applies to countries with which it does not have a free trade agreement. The EU continues to trade on this basis with the United States, China or even Brazil.
Of course, this could lead to smaller, sector-specific deals by the EU, creating more favorable conditions, analysts agree, who see that Hungary may be primarily affected by the food, pharmaceutical and automotive markets.
The UK was Hungary’s 10th export partner in 2019, with a total of approximately € 3.6 billion in exports. As our foreign trade balance was particularly positive, it showed a surplus of 1.8 billion euros, which is not far behind this year’s figures.
– lists Péter Goreczky’s data, all of which support that we can speak of a fundamentally stable business relationship, and Great Britain is indeed an important market for Hungary. Therefore, it is not negligible how the Brexit trade negotiations, which are expected to end once, will end.
(Cover image: Ben Stansall / AFP )
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