Brexit: Who is the biggest loser?

Within the coming months, negotiations will be officially kicked-off between the EU27 and the UK on the post-Brexit relationship. Much attention has been given to the potential impact on the British economy but far less to the consequences for the other member states. On February 7th, CEPS hosted a conference on behalf of ENEPRI (European Network of Economic Policy Research Institutes), to which experts from across the EU were invited to explore the challenges and opportunities for individual member states. The experts reported that the economic cost of Brexit for several smaller member states will be far below 1% of GDP, while others with stronger linkages to the UK market may experience a more substantial slowdown. These costs would be markedly lower if a comprehensive free trade agreement (FTA) were to be reached in a timely fashion. Interestingly, an analysis of existing studies quantifying the economic impact on both the EU27 and the UK showed that the costs, in terms of the loss as a share of GDP, are likely to be larger for the UK than for the EU – even more so if the Brexit becomes ‘harder’. Speakers in the final panel emphasised that while there are significant economic costs associated with Brexit, the political ramifications are far more wide-ranging. Depending on the paths chosen by the member states, the post-Brexit era may witness deeper integration efforts in policy areas previously blocked by UK opposition.