Five reasons why the United Kingdom can leave the EU and France cannot – Natixis

Why can there be Brexit and not "Frexit"? The United Kingdom became impoverished by leaving the European Union, but this exit was not disastrous. It would be disastrous for France due to five factors, economists at Natixis report.

Why the United Kingdom can leave the EU and France cannot

“UK long-term interest rates were spontaneously low, while the tight yield spread between France and Germany is linked to the ECB’s commitment to stabilise interest rates between euro-zone countries. France’s exit from the eurozone would then lead to a sharp rise in France’s long-term interest rates.”

“The UK gross external debt is in the country's own currency while France’s gross external debt is in euros. This means that a depreciation of the pound sterling has no effect on the UK external debt, while a depreciation of the French franc against the euro, which would be very likely if France left the EU, would lead to an unsustainable rise in France’s external debt.”

“The pound sterling is an important reserve currency, given the weight of the UK, which enables the country to receive capital inflows, thanks to this reserve currency role of the pound sterling, and therefore to easily finance a permanent external deficit. If France left the EU, the French franc would no longer be a reserve currency at all, and it would become very difficult to finance France’s external deficit.”

“The London financial centre has suffered little from the UK's exit from the EU, which would not be the case for Paris, which is a financial centre only because France is in the eurozone.”

“Replacing exports to the rest of the world with exports to the EU is much easier for the UK than for France. After leaving the EU, the UK succeeded in replacing part of its exports to the EU with exports to the rest of the world. It is doubtful that France would be able to make the same substitution, given the weakness of foreign trade and the chronic decline in export market shares.”