On Thursday, June the 27th, a new Brexit impact study by the KU Leuven university was presented to a broad audience of EU diplomats, international press and Flemish stakeholders. This study was carried out by Professor Hylke Vandenbussche with the support of the Flanders Department of Foreign Affairs.
The study clearly demonstrates the extent to which Brexit has a negative effect on European value chains. Flanders will clearly face a big economic hit in both a soft as in a hard Brexit scenario. In addition, the study also analyses the sectoral impact of Brexit on each of the EU member states. What is new in this study by Prof. Vandenbussche is that both direct and indirect trade flows are taken into account. This allows us to study more in detail which sectors will face the most negative consequences. The results will undoubtedly shape the Brexit debate given the many interesting and surprising elements.
One of the important takeaways of this study is that not only Member States (MS) that are geographically close to the UK, such as Belgium, are seriously affected by Brexit. A 'no deal' Brexit does not create a gap between East & West. Furthermore, many member states across the EU will face specific sectoral challenges. This is not surprising given that European value chains are underpinned by the European single market. In that context, North Sea Ports are a crucial link between the UK and the European continent. Additionally, the study confirms very clearly that the difference between a soft and a hard Brexit is enormous in overall economic terms.
Given the size of the sectoral job losses throughout Europe due to supply chain disruption, European solidarity in case of a no deal will be necessary. The EU budget should be mobilized in case of a no deal Brexit to absorb the negative impact and to support affected regions.
The complete study and main takeaways from Flanders can be consulted by clicking on the link.