The analytical method
In its cross-European analysis, which had been commissioned by the Dutch Ministry of Economic Affairs and Climate Policy, the Agency focuses on the comparative cost increases arising out of the tariff and non-tariff barriers that will come into being immediately after the Brexit. Specifically the study compares companies positions with those of domestic and foreign competitors. The “hard” Brexit scenario has been used, i.e., factoring in WTO tariff rates supplemented with the cost of non-tariff barriers. Therefore, the analysis does not use the “no deal” scenario with its associated various short term trade disruptions. The direct Brexit impacts arise from higher sales prices which are to be charged for goods and services supplied (from the Netherlands) to the United Kingdom (UK) while the indirect impacts arise from the higher prices that are to be paid by (Dutch) companies for goods and services imported from the UK.

Impacts on industries
According to the findings of the Agency, the competitive positions of Dutch telecom, financial services and travel/leisure companies in the Netherlands will be positively impacted, while in the UK the telecom, financial services, restaurants, car manufacturing and electronics industries will be negatively impacted. Among the negatively impacted Dutch companies are those in agriculture, chemicals, food production, retail (non-cars) and land transport, but the Agency does not see compensating positive effects in the UK. The only areas where they see positive competitive effects for UK companies are food production and wholesale trading. At the European level, the winners group includes car manufacturing, storage/logistics, financial services and real estate while the losers group includes food production, chemicals, metal products and non-car retail.

Impacts on the regions/provinces
In the main Western provinces of the Netherlands (North Holland, South Holland and Utrecht) the Agency sees important positive effects on companies competitive positions in the storage/logistics, restaurants, financial services and travel/leisure industries while negative effects are forecasted for agriculture, food production, chemicals and machine building. In the Southern provinces of Noord-Brabant and Limburg, the positive impacts are in car manufacturing, restaurants, financial services, real estate and travel/leisure while the negatives include electronics, machine building and furniture production. In the other provinces, red alerts are often found in the metal products and furniture industries.

Future Brexit-related negotiations
The Agency is confident that the results of its analysis can be used to help define the negotiation strategy of the Netherlands as they show the relevant strengths and weaknesses of the Netherlands (and its constituent regions) vis-à-vis the average positions of the other European countries.

Cost levels and investment
Whether multinational companies contemplating a move from or to the UK, the Netherlands or another European country will accept the Agency’s analysis of short term cost differentials as a solid basis for making investment decisions remain to be seen. The recent history of new foreign investment into the Netherlands shows what the real life industry focus and foreign background has been. A recent report published by the Netherlands Foreign Investment Agency said that a total of 372 foreign companies such as Giant, Timberland and DAZN generated 9,847 additional jobs in the Netherlands in 2018. Collectively, these companies contributed 2.85 billion euros to the Dutch economy. The NFIA report shows that the majority of new jobs are created within headquarters (2,259), followed by marketing & sales offices (1,834), distribution centers (1,053), service centers (977), production sites (884) and R&D locations (755). The majority of ‘foreign jobs’ are created by US companies. In 2018, this accounted for 3,185 jobs, with a total accompanying investment of 1.19 billion euros. Following the US is the United Kingdom (1,596 jobs), then China (614 jobs), Japan (580 jobs) and Germany (300 jobs).

Information
Do you want to know more about what the impact of the Brexit is for your business? We have developed five concrete products to help your organization. See the folder. Or do you want advice? Please feel free to contact Robert van der Jagt or other specialists of the Brexit team.