Yahoo Finance Hard Brexit would cost EU economy €112bn, Oxford Economics claims
EU businesses’ supply chains would be hard hit in the event of a ‘no-deal’ Brexit, according to an analysis from Oxford Economics.
A hard Brexit would cost the EU economy close to €112bn (£100bn), the think tank claims.
In a no-deal scenario the UK would face a combined impact of £125bn to its economy, but with highly integrated supply channels it would also constitute an economic shock for the EU, leaving some member states, such as Ireland and the Czech Republic, particularly exposed.
The report said: “The supply chain impacts will lead a loss in collective gross output of the remaining EU countries of up to €62bn or 0.3pc below our baseline forecast in 2020, in addition to the €50bn or 0.2pc of gross output lost due to the direct impacts.”
For countries such as Hungary, the Netherlands and Denmark economic output could fall by 1pc. The Czech Republic and Ireland, would be harder hit, with output falling by more than 1pc. This would "mark a significant slowdown in economic activity" according to the think tank.
The EU’s signal of a “take it or leave it trade agreement”, which would be similar to Canada’s deal with the bloc, is at odds with UK hopes for a bespoke trade arrangement, according to the think tank. Risks of a no deal situation remain high, therefore.
WTO rules would bring non-tariffs barriers which would add to costs, the report warned. There is not enough scope for a further devaluation of the pound in order to offset the impact of increased costs in doing trade on a WTO basis, according to Neal Kilbane of Oxford Economics.
Mr Kilbane said: "We don’t think that the pound has much more scope to lose value, as it is already undervalued by most measures. In addition, UK exports don’t tend to be price sensitive in nature to respond to by the required amount to offset the additional costs."
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