Western Cape may benefit from Brexit although the world will not


The surprising win of the Leave campaign in the 23 June 2016 United Kingdom (UK), which has been dubbed “Brexit”, may benefit the Western Cape even though globally the result is negative. This is because the wine and tourism industries should gain from increased access to the European market as South Africa will now have favourable trade relations with the European Union (EU) plus the UK, rather than the EU including the UK.

South Africa sent 23% of its manufactured exports to the EU including the UK and 36% of its agricultural exports. In 2015, the UK was eighth largest trading partner of South Africa. South Africa's exports to the UK amounted to R41bn, while imports were R35bn.

On 10 June 2016 the EU signed an Economic Partnership Agreement (EPA) with South Africa that includes better trading terms mainly in agriculture and fisheries, such as for wine, sugar, fisheries products, flowers and canned fruits. Many of these products will be sourced from the Western Cape. Once the UK has exited from the EU, then South Africa will be seeking as good (if not better) terms than the EPA from the UK.

UK tourists are the single largest source of overseas tourists for South Africa. In 2015 UK tourists to South Africa at 407,486 were more than double those from the BRIC countries.

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The number of UK tourists could fall if the UK goes into a recession and/or sterling continues to lose value relative to the rand, but in the medium term the Western Cape should gain as UK tourists are made to feel more welcome than if they go to EU countries such as France and Spain that may impose visas to make Britons feel less welcome.

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