Views on Brexit: The Czech Republic

As we welcome 2017, and with only 3 months to go until the projected triggering of Article 50, we continue with our views on Brexit series with a look at the reaction in the Czech Republic from our partner CEC Government Relations.

How has the UK’s decision to leave the EU been received in the Czech Republic?
Unsurprisingly, the referendum result unleashed populist movements across Europe, including Czech populists who see Brexit as a watershed moment and thus a tremendous opportunity for domestic power gains by calling for so called Czechout or Czexit. However, this movement has been received quite coldly by mainstream politicians and the general public as a vast majority of Czechs still realise that the Czech Republic gains substantially from EU membership – both tangible and intangible benefits – and leaving this system would bring serious economic uncertainty and weaken the country’s security. On the other hand, according to the long-term polls and surveys, a continuously growing dissatisfaction with the EU can be seen amongst the general public, especially after negotiations about the EU’s resettlement quotas as Czechs are very reluctant to host immigrants from the Middle East and North Africa.

Many policymakers from across the whole political spectrum see Brexit as an opportunity to finally reform the European Union and have called for its urgent changes to become more ready to act, be flexible, less bureaucratic and much more sensitive to the diversity that the 27 member states represent. On the contrary, there are fears, especially amongst conservative politicians, of misusing Brexit by the Commission for enforcing tighter political and monetary integration. At the end of the day, one of the biggest concerns of Czech policymakers about Brexit, not that visible in the media, is losing a long-term natural ally in several policy areas and a likeminded partner for EU negotiations.

How concerned are you about the impact on Czech citizens living in the UK?
Following the murder of a Czech citizen in September, which was not considered to be a hate crime in the end, and rapid increase in hateful attacks aimed at the citizens of “eastern” EU member states, Czech PM Bohuslav Sobotka urged Theresa May to take immediate action to stop violence against Czechs in the UK. According to Mr Sobotka, securing Czech citizens working in the UK (authorities put the number of Czechs working in Britain at 37,000, unofficial estimates put the number substantially higher at almost 100,000) is to be, together with Polish partners, a top priority of the Czech government in negotiations on the UK’s future relationship with the EU. Within the framework of maintaining good relations with the UK, the government stressed the importance of allowing British citizens to easily access the European market after Brexit and to preserve freedom of movement as similar as possible to its present form.

Do you think the Czech Republic will change its position on the free movement of people and access to the Single Market once negotiations begin?
It is highly probable that the Czech government will continue supporting the Single Market, especially in the area of services, the digital market, and energy, as these are also priorities for the Czech government. At the same time, they will certainly want to keep free trade with the UK as Britain is the Czech Republic’s fourth largest trading partner in terms of export.
Regarding free movement of people, taking into consideration the relatively small number of Czech citizens living and working in the UK, the government will probably, despite the latest aforementioned proclamations of PM Sobotka, leave negotiations about freedom of movement of people to other member states such as Poland, who have more of an interest in this area.

However, due to the Czech government’s inconsistent positions (some call them pragmatic) on various EU policy areas, it can be anticipated that for example an upcoming transformation of the Czech Republic from the net receiver to the net contributor to the EU budget could substantially influence and thus change some current positions on certain EU agendas.

Are there any particular industries in the Czech Republic that you think will be affected by the UK’s decision to leave the EU?
Definitely the automotive industry, as the leading Czech export articles to the UK are cars and car components. Britain is in the top 5 biggest car producers in the EU, massively reliant on a parts supply chain spread across the continent, and therefore it represents a relatively large market for Czech automotive industrial products exporters. In case of the UK losing access to the European Single Market or any serious drop in demand for auto manufacturing and parts production caused by Brexit (four out of five British-made cars are exported to the rest of the EU), it would negatively affect the Czech economy as the car sector represents a large part of the Czech industry. The same scenario could be applied to Škoda Auto, which sold over 74,000 vehicles to Britain last year, with Škoda voted the most reliable car brand in the UK and which is an essential driver of the Czech economy.

Author

Jiri Durovic

Jiri is a Consultant at CEC Government Relations in the Czech Republic.

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