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Will Brexit actually be good or bad for France?

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Will Brexit actually be good or bad for France?
Photo: AFP
17:24 CEST+02:00
With British voters deciding to leave the EU, the question in France (apart from why would they do that) what will the impact on France be?
There's no doubt that a Leave vote would throw Europe into unknown territory - but what would it actually mean for France?
 
Here is what a panel of economists told Le Figaro newspaper.
 
An economic hit
 
The IMF estimates that Brexit could cost between 0.2 and 0.4 percent of growth in the French economy by 2019.

In a survey by Standard & Poor's rating agency, France was ranked 11th out of all the EU nations, in terms of which economies would suffer the most from Brexit.

But other countries could suffer worse, with countries like Ireland, the Netherlands, and Belgium potentially suffering a hit of up to 0.5 percent.
 
Vincent Juvyns, a strategist at JP Morgan, argued that while a Brexit would have a "negative impact" for France, it wouldn't be as badly felt as elsewhere.
 
"France's economy is less open compared to that of its neighbours," he told Le Figaro. 
 
"France exports to the UK account for only 2 percent of the GDP, compared to almost 7 percent in Belgium and the Netherlands."
 
 
Why a Brexit would be a 'windfall' for France
 
A relocation of the financial powerbase?
 
Some have suggested that with the super power of London out of the EU, it would be a natural step for British businesses to cross the Channel and set up headquarters in Paris. 
 
But this is unlikely, according to several economists. 
 
"What nonsense!" said Marc Touati of consultancy firm Acdefi.
 
"What kind of crazy entrepreneur would want to set up his office in such a hell of red tape and taxes when there are so many 'tax havens' next door, like in Ireland or Luxembourg?" 
 
 
 
But some good news for France's banking sector?
 
While the financial industry is unlikely to move from London to Paris, Christopher Dembik - a macro-economic researcher at Saxo bank, believes France's banking sector may still profit from a Brexit. 
 
"French banks could take advantage of the (temporary) withdrawal of British banks and could increase their market share, especially when it comes to sectors like private banking," he told Le Figaro. 
 
He said that that competitor banks in the UK would face difficulties like getting banking status if they wanted to continue being present on the French market, making the French options far more attractive. 
 
Risk of financial crisis
 
According to Frabrizio Coricello, a professor at the École d'Economie de Paris, a financial crisis is the biggest risk for France in the short term. 
 
"Without the liquidity support the European Central Bank and the payment system from the eurozone, there is a risk of a meltdown in London's financial markets which would have very dangerous implications for the French financial system and the entire euro zone," he told Le Figaro. 
 
He said the crisis could be on a comparable level to that of the Lehman Brothers in 2008. 
 
Others agreed, including the founder of French economic consulting firm Acdefi, who said a Brexit would lead to the "break up of the European integration that we've known since the postwar period". 
 
"It will kick off an international wave of mistrust towards the EU, which will produce a particularly dangerous financial storm. This will lead to a stock market crash," he said. 
 
This global crash, he added, could be the trigger that raises awareness of Europe's financial fragility, leading to bond crashes in countries like France. 
 
"Don't forget - the French structural growth is only 0.8 percent compared to 2.5 percent in the UK. In other words, the UK is much better equipped when faced with an economic and financial storm."
 
 
'UK show us the way' say the French dreaming of Brexit
 
Division in French society
 
It's no secret that a successful Leave campaign would prompt other countries in the EU to reconsider their membership. 
 
It would certainly become a key topic in the 2017 general elections in France, and could strengthen the power anti-EU groups like the far-right National Front. 
 
Philippe Waechter, the director of economic research at the French corporate investment banking company Natixis, said that a Brexit would have a "significant political impact" for countries like France.
 
"Other European countries will see more influence from parties that are hostile to European integration, bringing about the seeds of disintegration," he said.  
 
'Unlikely' that exports will be affected
 
Ten percent of France's exports go to the UK, and with this in mind, it's unlikely that France would want to "punish" the UK for leaving the EU, according to Catherin Mathieu, a UK market specialist economist at the OFCE. 
 
"In the scenario where free trade agreements are in place, there would be a minimal impact on French exporters from a Brexit," she told the paper. 
 
Exporters "punishing" the UK would be "very unlikely", she said, because both sides would feel the hit.
 
Decline in foreign investment
 
If the UK were to leave the EU, there's no doubt that international investors would be more wary of the EU, said Juvyns from JP Morgan.
 
He said due to this, France would become "an indirect victim" of a Brexit as the international distrust of teh euro zone would lead to a decline in foreign investment. 
 
"Financial markets would be the first to be hit, but a stock market correction would lead to a negative wealth effect for households, or at least affect their morale which would hit their consumption level," he said. 
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