Potential Implications of Brexit: The Case of the Slovak Republic

Abstract

The shape of the future arrangement of bilateral relations between the United Kingdom and the European Union will also depend on the ability of both partners to find a general agreement throughout the process of negotiations. Considering the exports of goods, Britain represents a relatively important trade partner for Slovakia. The growing importance of the United Kingdom as a trading partner of Slovakia is indicated by the turnover of Slovakia’s foreign trade with the United Kingdom, which has almost doubled over the last decade. The results of the analysis carried out so far indicate that the impact of Brexit on the economic growth of Slovakia should be relatively small. With respect to the short-term migration of Slovaks to work abroad, the decline of the importance of United Kingdom has been observed in recent years. On the contrary, the long-term migration of Slovaks has seen a growing trend with a rising share of Slovak citizens employed in the United Kingdom that have achieved higher than secondary education. At present, we cannot say what kind of bilateral relations between United Kingdom and European Union will be established in the area of labor force movements. The impact of Brexit on the labor market in Slovakia is therefore questionable. The results of our analysis show that approximately 62,000 jobs are directly and indirectly linked to Slovak exports to the United Kingdom, accounting for about 2.8% of the total employment. Exports to the United Kingdom generate most jobs directly and indirectly in the services sector, accounting for 61% of the total number of jobs linked to the exports from Slovakia to the United Kingdom, while the dominating industries are the automotive, mechanical engineering and electrical engineering sectors.