Article in Politico by JACOPO BARIGAZZI
The impact of Brexit will vary considerably across the European Union, with some regions bracing for severe costs and others less exposed.
That’s the message from data collected by the EU’s Committee of the Regions on the predicted local economic and cultural fallout of the U.K.’s departure from the bloc. The document, made up of questionnaire responses submitted by local officials and obtained by POLITICO, reveals a detailed and diverse patchwork.
The findings is sure to bolster the view among Brexiteers that there may be divisions on the EU side that can be exploited to Britain’s advantage in Phase 2 of the negotiations, which are due to start within weeks. So far, the EU has demonstrated rock-solid unity over the three divorce issues of citizens’ rights, the Brexit bill and the Northern Irish border. But that may be harder to sustain when talks touch on issues for which countries (and regions within countries) have differing interests.
EU leaders are aware of the danger. French President Emmanuel Macron warned on Friday that the EU27 must present a “united front” or risk an outcome “unfavorable to the European Union and thus to each one of us.”
“It is highly significant that other EU member states’ authorities are beginning to engage with the consequences of a no-deal Brexit because it is something that should concern them greatly,” said prominent Tory Brexiteer Bernard Jenkin. “I think the pressure is mounting on the EU negotiators to deliver a sensible deal which disrupts as little as possible.”
The 72-page document compiled for the EU’s assembly of regional and local representatives includes submissions from 42 regions, municipalities, provinces and national delegations. Among the biggest concerns are the impact of Brexit on future trade, agriculture, fisheries, citizens returning from the U.K. and cuts to the EU budget post Brexit.
The questionnaire was sent to the organization’s 350 members at the end of September. An EU official explained that the committee has not “verified the veracity of the figures, that task has been left to the administrations that submitted them.”
A study published last month led by researchers at Erasmus University Rotterdam found that regions in Ireland face the most severe Brexit consequences, with potential economic exposure on par with the impact on regions of the U.K. that are currently most dependent on ties to the EU. Their analysis predicts that countries closest to the U.K. — such as Belgium and the Netherlands, as well as those with high volumes of trade such as Germany and France — will suffer the biggest economic impact from Brexit.
The submissions to the Committee of the Regions bear this out, but paint a more complex picture, with localities across the Continent voicing worries about the impact of Brexit. Here are some of the main local impacts:
Trade and agriculture
Trade is a concern for the great majority of local authorities across Europe who responded to the survey. The German city of Bremen stressed that the U.K is its third-largest trade partner while Berlin pointed out that the U.K. is its fifth-largest. For Cyprus, “Britain is the second trading partner … as a whole and the first one in terms of services, investment and shipping.” And while Polish regions made clear their biggest concern is a reduction of the EU budget, the province of Lublin, southeast of Warsaw, is also worried about reduced exports, “especially agricultural and agri-food products.”
Paul Lindquist, the Swedish official who responded on behalf of Stockholm, warns that “the U.K is the third largest foreign investor in Sweden [around €31 billion in 2014] … and the seventh largest Swedish investment market.” And in Murcia, in the southeast of Spain, the U.K. is the No. 2 destination for exports (10.4 percent of total), “with the agri-food industry being the most important, sending 75 percent of its exports to the U.K.,” two local officials write.
Ireland is among the most concerned, because of its extensive and deep economic links to the U.K.
In the Netherlands, central regions are most concerned. The Dutch delegation quotes research by the Dutch bank ING, released in May last year, showing a top 10 of the most affected regions: No. 1 is the Utrecht province where 8.5 percent of exports go to Britain. The province of Groningen in the north is concerned because of its reliance on trade in natural gas with the U.K. Another Dutch province, Drenthe — where important biochemistry and the synthetic fibre industries are concentrated in the city of Emmen — sees a silver lining in the fact that the British chemical industry exports mainly to the EU. That means companies in Emmen “can take advantage of the deteriorating marketing position of British competitors,” its submission reads.
A post-Brexit trade deal is seen by the Flanders region of Belgium as key: “A hard Brexit will lead to 42,000 job losses, whereas a trade agreement could limit these to 10,000 jobs,” according to local official Karl Vanlouwe. The U.K is the “fourth export market for Flanders with €27.66 billion” and “the Flemish road transport sector … will be very hard hit due to changes in customs, free movement of people, potentially deviating rules on health and safety, etc,” the submission reads.
Ireland is among the most concerned, because of its extensive and deep economic links to the U.K. The official who responded on behalf of the Irish delegation, Michael Brennan, lists the maritime and agri-food sectors as areas of concern, as well as energy links to the U.K.
“Ireland imports 89 percent of its oil products and 93 percent of its gas from the U.K.,” he writes. Since 2007 there has been a single electricity market for the whole island and “post Brexit this single market will be affected and Irish energy security may be weakened.”
The Irish counties covered by the Northern & Western Regional Assembly, and which share a border with Northern Ireland, are “the most exposed region to Brexit effects due to its high volume of cross-border trade and relative deficits in transport infrastructure (international airports, high-speed motorway, rail services and ports) and digital services,” the submission reads.
Aerial view of Calais and its ferry port | Philippe Huguen/AFP via Getty Images
The Hauts-de-France region in the north of that country (where President Emmanuel Macron was born) also has strong economic ties to the U.K. Its official, François Decoster, stresses that “in the automotive sector, there are major concerns regarding future relations with the U.K, particularly on the part of the car maker Toyota, which operates in the region. For example, 13 percent of Yaris exports in 2016 went to the U.K.”
There are also concerns about the port of Calais. If the U.K. leaves the single market and customs union — as is the government’s stated aim — “the police/customs authorities will have to treat the U.K. like any other third country, for example by applying the common customs tariff to goods originating in the U.K,” the submission reads. “This could have a negative impact on the fluidity of trade flows between the ports of Calais and Dover,” it warns.
The prospect of the U.K. leaving the EU’s Common Fisheries Policy (CFP) and potentially blocking access to the waters in its Exclusive Economic Zone — the area around its shores where it will regain control of fishing rights — is causing anxiety in several coastal communities across Europe.
The French département of Finistère, in Brittany, is bracing itself for a hit to its fishermen. “The end of the access to the British fishing areas to the Finistère fishing boats is a real economic risk, 50 percent of the fishing activity in Brittany region … is made inside the British Exclusive Economic Zone,” warned local official Nathalie Sarrabezolles.
“Wholesaling and processing of sea products provides 5,000 jobs in 150 companies. Thus significant effects are to be expected in the case of a hard Brexit” — François Decoster
Hauts-de-France is home to France’s main fishing port, Boulogne-Calais, which the report describes as the main European center for the treatment and processing of sea products. “Along the region’s coastline nearly 170 small-scale and deep-sea fishing businesses produce a turnover of close to €80 million with a fleet of around 190 vessels, providing nearly 900 on-board jobs,” writes Decoster.
“Wholesaling and processing of sea products provides 5,000 jobs in 150 companies. Thus significant effects are to be expected in the case of a hard Brexit,” he adds. The official warns that if the U.K. withdraws from the CFP, the whole thing may “unravel.”
Regions of the Netherlands are also potentially heavily impacted by losing access to U.K. waters. In the central Dutch province of Flevoland, the coastal town of Urk (which sports a fish on its coat of arms), is concerned that the fishing and fish processing industries will be badly hit (40 percent of its economic activity is based on fishing). The provinces of Flevoland and Overijssel predict a potential drop of 60 percent in fishing business.
There are a range of concerns across Europe linked to changes in the movement of people as a result of Brexit, including managing migration, coping with reduced tourism and dealing with citizens returning home from the U.K.
Migration is mainly a problem for the region of Calais, from where many migrants try to reach the U.K. The eventual Brexit settlement will be “relevant to the management of migration flows … into Calais and more generally the issue of the potential renegotiation of the bilateral Le Touquet Agreement” between the U.K. and France that allows British border police to operate in Calais, according to the Hauts-de-France submission.
Migration is mainly a problem for the region of Calais | Philippe Huguen/AFP via Getty Images
The Spanish region of Andalusia, close to Gibraltar, is concerned about the large numbers of its citizens who work in the British territory (which has a special status in the Brexit talks). According to its submission, “58.7 percent of Spanish workers in Gibraltar will be affected.” Fears that Brexit will affect tourism are voiced by Spanish regions such the Balearic Islands, including Mallorca, a popular destination for British package holidays. There is similar anxiety from local authorities in Greece and Cyprus.
For Prešov, the Slovak region in the east of the country, citizens returning home from the U.K. will present potential difficulties. “It can cause the increase of the unemployment rate in Prešov,” writes official Andrea Turčanová. In Portugal, Mário Sérgio Quaresma Marques, the official in charge for Madeira, an archipelago off the Moroccan cost, warns that a large-scale return of citizens “would result in an immediate and significant increase in unemployment in the region (!), one that already has a high level of unemployment.” (The exclamation mark is in the original text.)
Polish regions, though, have a different view. “The return of Polish citizens to the region can be positive and thus provide a greater number of emerging companies and, of course, greater regional consumption,” writes Slawomir Sosnowski, the Polish official who filled out the report for Lublin province. The country is hoping to entice young and talented workers home to boost its economy.