If the United Kingdom (UK) leaves the European Union (EU) without a trade deal, it will lead to financial damage for businesses. This is apparent from research by the KPMG, commissioned by the Ministries of Agriculture, Nature and Food Quality (LNV) and Economic Affairs. With this study, the ministries want to prepare entrepreneurs for the worst-case scenario.
Import and export costs will increase by €387 to €627 million annually as a result of Brexit. These additional costs arise from, among other things, trade tariffs and customs duties. The exact amount of economic damage will depend on the outcome of the Brexit negotiations.
The ministry emphasizes that it does not know whether the negotiations will lead to a hard Brexit, but that this must be taken into account. According to the agreements, the UK will officially no longer be a member on March 29, 2019 and an agreement should be signed by then.
(Text continues below the tweet)
Agricultural products account for 11% of bilateral trade between the UK and the 27 European Member States (EU-27). The EU-27's trade balance is positive with $47 billion in exports and $18 billion in agricultural imports. Ireland, Germany, France and the Netherlands are the UK's main trading partners within the EU. About 7% of agricultural exports from the UK go to the Netherlands and 10% of Dutch agricultural exports go to the UK.
Less agricultural exports to UK
According to studies, Brexit will lead to a reduction in agricultural exports from EU countries. The size of the reduction will depend on the final trade agreement between the EU-27 and the UK. The agricultural products that cannot be sold in the UK will be sold to a large extent in other countries.
This shift effect will limit the effects of Brexit on agricultural exports. For example, agricultural exports from Ireland to the UK will fall; by 20% to 55%. However, total Irish agricultural exports will fall by 1,5% and 7% respectively.
It is not yet clear what the shift effect will be for Dutch agricultural exports. The Central Planning Bureau (CPB) has calculated that the total Dutch agricultural export of primary products can fall by about 0,2% to 1% and that the export of processed foods can fall by 6% to 10%, as a result of Brexit.
(Text continues below the tweet)
Less time left
The Brexit deadline (29 March 2019) is fast approaching. As the uncertainty surrounding future trade relations continues, there will be less time for companies to prepare. "Brexit has major economic consequences, which is also confirmed by this research. So prepare yourself as an entrepreneur in time. The government would like to help, but an entrepreneur must do the most important work himself," said State Secretary Mona Keijzer of Economic Affairs. the website of the ministry.
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.
