Exporters 'face €65bn bill for red tape under hard Brexit'
Exporting companies in the UK and EU face additional red-tape costs of about £58bn (€65bn) in total in the event of a hard Brexit, a report has said.
The study by consultants Oliver Wyman said country level differences are pronounced, singling out the agri-food industry here and the car and manufacturing sector in Germany as particularly exposed.
If the UK crashes out of the EU without a deal, the annual costs overall, both tariff and non-tariff, for exporters in the remaining member states is estimated to amount to £31bn.
That's fractionally more than for UK exporters, who will be hit with a £27bn bill.
Oliver Wyman said the study focuses only on the direct impacts of the UK's exit from the EU which are of immediate importance to companies for Brexit planning. It does not model additional impacts such as migration, pricing changes or third-country Free Trade Agreements, which are likely to increase the overall impact.
The report noted that in the EU27, the hardest-hit sector will be automotive, where the direct impact will be around 2pc of current Gross Value Added (GVA). But it added: "Country-level differences will be pronounced. In Ireland, for example, the exposure of the agricultural sector to UK consumers is a particular pinch point, and in Germany four of the 16 states - Bavaria, Baden-Württemberg, North Rhine-Westphalia, and Lower Saxony - will shoulder around 70pc of the total impact due to their respective strength in automotive and manufacturing."
It added that in the UK the financial services sector will take by far the biggest hit, incurring around a third of the extra 'red-tape' costs.
However, there are very significant impacts in other sectors where firms are highly integrated into European supply chains - for example in the automotive, aerospace, chemicals and metals and mining sectors.
If the UK stays in a form of a customs union, it would reduce the costs for both sides by about half, the report said.
But Prime Minister Theresa May has ruled out keeping Britain in an EU customs union because it would prevent the country from striking its own trade deals.