Wed, Jan 24, 2018 - Page 9 News List

Europe must wake up to the dire consequences of a hard Brexit

By Joris Luyendijk  /  The Guardian

Because it is such a riveting clown show with crazy episodes almost every day, Europeans can be forgiven for ignoring that Brexit is going to hurt them too.

However, as the date of Britain’s departure comes closer and British Prime Minister Theresa May’s government continues its kamikaze policy of demanding the politically unthinkable from the EU, it is time for Europeans to wake up and begin preparing for the worst.

The Dutch government on Thursday published a report drawn up by the consultancy firm KPMG analyzing the consequences of a “no-deal” Brexit in which the UK leaves the EU without an agreement on March 29 next year.

Here are the practical implications and cold numbers behind the hot-headed rhetoric about no deal with the EU being “better than a bad deal” for Britain:

Should the UK “crash” out of the EU by late March next year, the Dutch companies trading with the UK would have to secure a total of no less than 4.2 million exporting and 750,000 importing licenses. If by this time both states have a functioning customs system in place — a big “if” for this consistently incompetent UK government — costs for companies are between 80 euros and 130 euros (US$98 and US$159). That is per license.

The price tag for all this new red tape is 600 million euros for the Dutch side alone. This excludes the costs of new export and import tariffs, value-added tax and other new “sector-specific” barriers for trading with the UK.

The 35,000 small and medium-sized businesses unused to trading with non-EU countries also face an estimated cost of 20,000 euros to 50,000 euros to adapt their IT systems.

Added to this must be the likely effects of the inevitable economic slowdown — or worse — in Britain, the report says.

When the nation leaves without a deal it must “fall back” on the minimal WTO rules for trade, but financial services and aviation fall outside the WTO regime, meaning that after a British no-deal departure, both sectors must stop trading with the EU overnight. Between Amsterdam’s Schiphol Airport and London alone there are 60 flights a day — one every 15 minutes.

Much like US President Donald Trump, the Brexiteers have proven themselves immune to information or insight that does not meet their emotional needs. This must be why they continue to hope and insist that to avoid this proliferation of new barriers to trade, the EU will relent and allow Britain to have its cake and eat it — to forget about the obligations of EU membership while continuing to enjoy its many advantages.

This simply will not happen. Even the ardently pro-British Dutch government has made clear again that the choice for Britain is simple.

It can buckle and accept the EU’s conditions for continued “frictionless trade,” or it becomes a “third country” on the periphery of Europe — like Morocco or Turkey, except that Turkey will have more privileges, because of its customs union with the EU.

About 200,000 Dutch jobs are involved in trade with the UK and, according to calculations by the prestigious CPB Netherlands Bureau for Economic Policy Analysis, a hard Brexit could make every Dutch person poorer by an average of 1,000 euros.

However, the Dutch government did not use the report to make the case for concessions to Britain. Instead, Dutch State Secretary for Economic Affairs and Climate Policy Mona Keijzer simply said that “it is up to businesses to start preparing.” It also called on government agencies to get ready.

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