The Conference Board reported (27-Jun-2013) its leading economic index for the Euro Area increased 0.4% and its coincident economic index decreased 0.1% in May-2013. The Conference Board economist for Europe Bert Colijn said, "We could see a slow recovery before the end of the year, but confidence in the Euro Area economy is still fragile and could be easily reversed if another episode of financial uncertainty occurs." [more - original PR]
Europe's economy still fragile, recovery possible in 2013: The Conference Board
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Brexit and aviation Part 2: lower air traffic, economic uncertainty. UK-EU relations up in the air
The British exit from the European Union will have a negative impact on UK air traffic as a result of weaker GBP – an immediate effect – and a weaker GDP outlook. Air freight is also likely to be negatively affected by lower levels of international trade. The impact on air traffic is also likely to be felt in the rest of Europe, while economists are also warning that Brexit adds to the uncertainties facing the global economy.
European airline share prices have been hard hit since the UK referendum result was announced early on 24-Jun-2016, particularly those of easyJet and British Airways' parent IAG. This reflects the likely lowering of demand, but also the significant regulatory uncertainty surrounding the sector, particularly with respect to market access.
UK membership of the European Common Aviation Area would preserve existing market access and is the expected route. However, UK political turmoil and question marks concerning its ongoing commitment to EU principles may compromise its access in the future. Profit warnings from IAG and easyJet point to at least a slowing of profit growth. It is difficult to see the world airline profit cycle continuing the upswing of recent years.
Brexit and aviation Part 1: Open Pandora's box and anything can happen. But status quo is likely
The 23-Jun-2016 UK vote in favour of British exit from the EU came as an enormous shock to observers, despite strong warnings from pollsters. The first implication is for an unwelcome period of uncertainty. But, as with any major shock of this sort, the immediate warnings of disaster and market collapse normally dissipate as thinking adjusts. Having passed the political silliness of leaving such a major and complex decision effectively to chance, the bureaucrats will now begin to pick up the pieces and work around the complexities.
There are numerous potential implications for the aviation sector - the most serious being that the withdrawal of the UK from EU decision making will allow the protectionist forces in Germany and France to become more influential in formulating EU policy directions. Otherwise, many of the potentials can probably be worked around, over time. Meanwhile, uncertainty remains the order of the day, while the lengthy unravelling occurs.
For consumers, the single aviation market and the US-EU Multilateral open skies agreement are the most immediate issues. For European services, the likely outcome is for the UK to negotiate single market access, as Norway and others have, through the ECAA, despite not being EU members. This would broadly maintain the status quo from a consumer perspective and the UK's airlines would retain full market access. Ironically though, they would have to comply with associated EU regulations, despite having no say in their formulation - the opposite of Brexit's supposed objective in giving the UK greater independence. And the North Atlantic agreement has become so important, for liberals and protectionists alike, that a UK disappearance is most unlikely.