Here's a comprehensive look at how Brexit is already impacting the region.

Christine is a journalist from South Africa, who has lived and worked in Europe, Africa and the Middle East, covering everything from hard news to art to business & tech. Having been bitten by the travel bug as an infant, Christine finds it fairly easy to uproot herself in search of new adventures and stories. With degrees in both fine arts and journalism, she’s equally interested in visual storytelling as well as the written word. Having been part of three launch teams of three different media startups in her lifetime, she’s intimately familiar with what it takes to get a publication off the ground.

Following the jaw-dropping referendum vote on Thursday June 23, news that the United Kingdom may exit from the European Union is having varying implications on countries in the MENA region.

Early economic forecasts on Friday morning showed worldwide markets in turmoil and instability as investors continue to monitor the British pound plummet.

It is important to note that the referendum is not instantaneously legally binding and solely serves as an advisory instrument and not an obligatory one.

Legally, the British government may invoke Article 50 of the Lisbon treaty, But until the Prime Minister does so, the UK is still a member state of the EUq and must still abide by EU law and legislation.

Be this as it may, as was predicted, the results of the vote caused a much-anticipated stir throughout the world and the only thing that is certain at this point, is uncertainty. And we all know what uncertainty does to an economy.

So with all eyes on what will happen next, here’s a look at how it’s already starting to affect the region.

Egypt flag Egypt


Tourism from the UK has brought in roughly 200,000 tourists a year. The grave consequences on the British economy means that the Egyptian tourism industry will be hit hard: households will curb expenditure on tourism caused by the drop in the sterling. Not such good news after British Airways recently suspended flights to Sharm El-Sheikh amid terror fears.


So far, Egypt has enjoyed a relatively docile relationship with the UK and has maintained strong diplomatic ties with the nation. However, future political uncertainty that plagues the UK may very well affect its foreign policy with Egypt.


British-Egyptian bilateral ties could weaken as a result of a lack of strong leadership and the resignation of David Cameron. Egyptian engagement with the UK will be difficult, particularly as its relationship with NATO could change. Joint military arrangements could suffer as Britain is one of the major military powers in Europe. The US might cease to provide a bridge between NATO and the EU, which will upset the political and economic balance of power.


Up till now the Egyptian-British Chamber of Commerce (EBCC) had upheld that trade continued between the two nations. The UK currently has 53 trade agreements, many of which solely depend on its membership with the EU (the world’s biggest trade area) and its direct market access to Europe.

So with the EU being Egypt’s primary trading partner, having covered 22.9% of Egypt’s trade volume in 2013, and ranking first as both Egypt’s import and export partner, this could all be changing soon.

The Egypt-EU Association, signed in 2004 ‘establishes a free-trade area with the elimination of tariffs on industrial products and significant concessions on agricultural products, reported independent news group, Egyptian Streets.

As a Brexit rolls out, it will cause bilateral negotiations and liberalization policies to come to a grinding halt and as new protectionist measures are put in place, it will greatly affect Egypt’s market access to the EU.

Egyptian business owners who conduct business and/or trade with the UK will have to cross their fingers that the UK sustains as many ties as possible with Europe.

Foreign Investment

Almost exactly a year ago British Ambassador John Casson told Daily News Egypt that, Britain was the biggest foreign investor in Egypt, where investments had reached $24.1billion in the last five years, marking 49.5% of total FDI in Egypt. And when Britain brought the biggest trade mission to any country to Egypt, in the beginning of 2015, for a minute there it seemed as though British companies were really paying attention to Egypt.

However, the plummet of the sterling pound and investment capital will greatly impact the Egyptian economy. An EU without the UK will be a more regulated Union and will therefore raise obstacles to trade to, thus losing its competitive edge.

Lebanese Flag Lebanon


Lebanon’s economist have forecast a short-term positive effect on its economy before uncertainty sets in. However negative repercussions have already started impacting Lebanese investors in UK real estate and stock markets.

“Brexit will result in a decline in the euro currency and since our local currency is pegged to the US dollar, our import bill from the EU will go down,” economist Ghazi Wazni said.

Lebanon has minimal trade with the UK, and with the sterling taking a nose-dive, it’s import bill will be favourable too.


Because Lebanon’s Central Bank has the second most gold reserves in the MENA region, the surge in gold prices following Thursday’s Leave vote might have a positive impact, according to Wazni.

However, economists stress that gold is used as a last defence line to keep the Lebanese pound stable, as Lebanese law dictates that the Central Bank is not allowed to liquidate or sell the gold unless Parliament votes in favour of this step. So it’s unlikely to happen anytime soon.

The Central Bank has around 9 million ounces of gold reserve and its market value is over $12 billion.


As oil and fuel are Lebanon’s largest imports, the drop in oil prices may also be good for the country as its trade deficit goes down and balance of payments will improve.

Investment & Banking

Despite some positive effects being forecast, economists believe that that they will be short-lived. “Lebanese investors in the stock markets in the UK will see the value of their investments go down following the vote,” said Nassib Ghobril, head of the research department at Byblos Bank.

For Marwan Barakat, head of research at Bank Audi, Britain’s vote to exit the EU is expected to delay any possible increase in interest rates by the US Federal Reserve which, in turn, will prompt the Lebanese government to refrain from increasing interest rates while cutting down banks’ profitability.

In Barakat’s view, the Lebanese banks may contemplate increasing interest rates to improve profitability if the Fed takes this step.

“We were hoping to witness an increase in interest rates to improve the percentage that we get on our treasury users in order to improve our spreads, which are at very low levels today, but this will not happen anymore,” he added.

Gulf Cooperation Council GCC Flag GCC


Both Saudi Arabia and UAE had reportedly made ‘precautionary changes’ in anticipation of the vote, and will continue to monitor the situation.

On Saturday, Saudi Arabia, the world’s largest oil exporter and Opec heavyweight, maintained that the Brexit vote hadn’t yet greatly affected its financial institutions, as it had made some adjustments to assets denominated in sterling and euros before the vote took place. Reuters reported.

The UAE also said that any effect on its financial institutions would be limited.

“Due to the limited interconnectedness between the UAE and UK financial systems, there are only few channels through which uncertainty about future UK and EU relations could affect the UAE financial institutions,” the country’s central bank said in a statement.


Stocks across the Arabian Gulf plummeted in the wake of the UK’s shock decision to leave. And market volatility across asset classes is forecast to continue both globally and locally, as markets struggle to come to terms with the implications.

UAE investors rushed to sell in the morning following a rout of global equities on Friday, with just seven stocks gaining in value throughout the day, reported the National.

The Dubai Financial Market General Index fell by 4.7% in early trading, before regaining ground to finish 3.25% lower at 3,258.17, their steepest one-day fall since January. Shares in Abu Dhabi also opened 4.7% lower, before recovering to close 1.85% lower.

“While first day effects may be limited, we expect more volatility for the remainder of 2016 as post-Brexit pains combine with political uncertainty in Europe and the US,” said EFG Hermes in a research note. “MENA and global equity markets are likely to remain volatile for much of 2016, and risks to growth now appear to be tilted to the downside. Central banks may try to calm markets, but political uncertainty will limit how much effect they have.”


A local Kuwaiti analyst has predicted that the Brexit would lead to a $5 drop in the price of a barrel of oil in international markets – from $60 to $55 for the benchmark Brent crude. So far, Kuwait’s oil has gone down to to $43.38 per barrel after being at $44.55 per barrel the day before, Kuwait Petroleum Corporation (KPC) said.

The exit may also cause the Kuwaiti oil price to average about $47 a barrel for the rest of 2016, said oil analyst Abdul-Samiea Behbehani. He expected that a Brexit would eventually have negative ramifications for oil prices during the remainder of the year and possibly next year.