THE HAGUE (AFP) – The Netherlands will be hit hard if Britain leaves the EU, a Dutch government thinktank warned Thursday (June 9), predicting a possible 1.2-per cent fall in GDP by 2030.
Britain, though, would be affected even more, it said, adding that London could take “years” to reforge its trade ties with the European Union if it pulled out of the 28-nation bloc.
“If the United Kingdom withdraws from the European Union, it will affect the Netherlands more severely than other EU countries because of the strong (bilateral) trade relations,” the Central Planning Bureau (CPB) said.
The drop in trade “could amount to a GDP loss for the Netherlands of 1.2%, or 10 billion euros (S$15.4 billion), by 2030”.
And the effects could be even further heightened by less innovation which “could amplify the GDP loss of 10 billion euros by another 65 per cent.” Britons will go to the polls on June 23 to vote in a bitterly divisive referendum.
Previous analyses have predicted the Netherlands, which lies just across the busy North Sea shipping lanes from Britain, could suffer some of the greatest fallout from a Brexit.
According to different scenarios, the drop in gross domestic product could add up to a loss of between 450 euros to 1,000 euros per person.
Sectors more tightly interconnected with Britain such as chemicals, plastics, rubber and electronic equipment would bear the brunt, with production losses of up to 5 per cent, the report warned.
Those sectors along with the auto industry and food processing account for some 12 per cent of Dutch GDP.
That in turn could spark job losses, as well as a fall in wages, the CPB predicted, forecasting as many as 40,000 jobs could be shed across all areas.
“However, in a number of other sectors, employment would increase, such as an additional 15,000 jobs in the low-tech industry and in the sector ‘other financial services’,” it said.
But mirroring other recent reports from economic institutions, the Dutch bureau had an even starker warning for Britain.
“The UK is far more dependent on the trade with the EU than vice versa,” it said, highlighting predictions from the World Trade Organisation (WTO) which said by 2030 Britain’s GDP could have fallen by 4.0 per cent.
“If we assume that innovation would lag behind due to reduced trade levels, these losses may even increase to nearly 9% of GDP. In that case, the UK losses would be similar to those experienced during the 2008-2009 crisis.”
The repercussions could be mitigated if the EU were to enter into a separate trade agreement with Britain, but it would take time to negotiate.
Any withdrawal from EU could take two years to complete and a “renegotiation process for various trade agreements will likely last a number of years.” The intervening years would usher in a period of uncertainty, which could also drag down business confidence.
It was also uncertain that all EU members would be in favour of a new trade accord, as “the Brexit-related costs are relatively low for countries in eastern and southern Europe.”