SA must plan for 'worst case scenario' amid Boris Johnson's rise

Professor Raymond Parsons of the North West University told Fin24 on Tuesday that the rise of new UK Prime Minister Boris Johnson meant that while SA would continue to speak to its counterparts in the UK, it would need to develop further plans for a "hard" Brexit.

Parsons said Johnson's move to 10 Downing Street would have significant potential for disruption and uncertainty in existing trade relationships and will have a negative ripple effect on the global trading system.

Former UK prime minister Theresa May resigned in June after repeated unsuccessful attempts at getting the House of Commons to accept a Brexit deal, heightening the risk that the UK might leave the European Union without a deal. Johnson is likely to fight for a Brexit deal to be passed ahead of time as one of his biggest priorities. 

"Both the UK and the EU are major trading partners for SA. The possibility of a 'hard' Brexit, with the UK 'crashing out' of the EU without a deal later this year therefore remains a worst case scenario even for countries like SA, who have a big stake in both the UK and the EU economies," said Parsons.

Parsons said South Africa would, therefore, have a vital stake in the prospects for a smooth and orderly Brexit. He said the UK will have to set the agenda for itself before South Africa can respond in any comprehensive way.

"The UK must obviously now decide its own economic future around Brexit, whatever the collateral trade consequences for other countries with whom it does business, like South Africa.

"Hence both government and the business sector in South Africa will need to still monitor Brexit developments carefully in the months ahead," Parsons said.

Parsons said to limit any possible damage to local industry and jobs, SA must continue to prepare contingency plans to ensure continuity and predictability in its future trade relations with the UK and EU.

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