A hard Brexit will have a greater impact on the competitive position of the Netherlands than other EU countries, but whatever happens, the effect on Britain’s regions will be more severe, according to a discussion paper published by the Netherlands Tinbergen academic institute.

The researchers looked at the impact of introducing tariffs and other cost effects on the main European regions and found that regional economies in the UK will be hit substantially more by rising costs than regions in other European countries.

In total, the cost increase effect on the UK will be twice as high as in the Netherlands and some four times greater than for the EU excluding the UK, the researchers said.

‘UK regions outside London and medium-sized city regions like Manchester, Liverpool and Leeds are affected more than the UK in general,’ the report said.

‘In mainland Europe, relatively larger cost increases can be seen in agricultural Zeeland and Flevoland in the Netherlands, Ireland and South Hungary, and in production-intensive German regions – but never to the degree as in UK regions.’

Food production

While the introduction of tariffs would be important for car manufacturing in the UK, it is tariffs on the food production sector that may be more important in the (agriculturally specialised) Netherlands, the researchers said.

Brexit is not bad news for all of Europe, however, the researchers said and countries on the southern and eastern fringes of Europe may actually benefit as costs and competitiveness increase.

Other noticeable ‘winning’ regions in terms of their post-Brexit competitiveness are urban regions such as Paris, Barcelona, Madrid and Stockholm, although these effects are sensitive to the type of Brexit that is put in place, the researchers said.

Impact

Economic research bureau SEO said in January a no-deal Brexit will cost the Netherlands at least €34bn up to 2030, the equivalent of €164 per resident per year.

The researchers reach their conclusion by combining the various estimates about the impact of a chaotic exit which have been made to date, the FD said.

The national audit office, for example, says when Britain leaves the EU, the Netherlands will have to pay an extra €1.25bn in 2021 to shore up the EU budget.

That, combined with a structural increase of €2.5bn to €3bn a year from 2026 will add €15bn to the bill.

Trading links

Experts say the impact of Brexit on the Netherlands will be larger than in many other countries because of the close trading links between the two.

The International Monetary Fund said last July that should Britain pull out of the EU without any fixed trade deal in place, Dutch national income would fall by 0.7%.

Only Ireland with a projected fall back of 4% in national income would be worse affected, the IMF said.