The Economic and Political Impact of Brexit on the EU and the Netherlands

The implications of Brexit extend far beyond the United Kingdom. The economic and political ramifications are significant for the European Union (EU), particularly for its largest economies, such as the Netherlands. The decline in trade and its broader effects are a testament to the interconnectivity of these economies.

Impact on the Netherlands

The Netherlands, one of the closest economic partners with the United Kingdom, has seen a decline in trade since the Brexit referendum. Exports to the UK dropped from 10 to 7.8 billion euros in 2018 and to 7.3 billion euros in 2019. Conversely, imports from the UK have slightly increased, bringing the trade imbalance closer to equilibrium.

While this trend indicates a growing interest in other markets, it also highlights a significant loss. Since the exit, the Netherlands has lost 11 billion euros in exports to the UK. Dutch companies are shifting their focus to other EU nations and the United States. The real estate crisis in the Netherlands has exacerbated due to more employees choosing to move to the UK, drawing attention to the housing market as a critical factor in economic planning.

Positive Developments from Brexit

On the bright side, Brexit has spurred the relocation of both British and foreign companies to the Netherlands, leading to a significant boost in job creation. Over 400 companies have relocated, creating thousands of jobs in just three years. However, this has put additional pressure on the housing market, an issue that is already dire.

The move of companies to the Netherlands also presents a strategic shift in the EU's focus. The EU is increasingly looking to other markets for growth and revenue. This includes increased engagement with the United States and other EU member states.

The Economy of the European Union

The European Union is heavily export-driven, and its economic and employment rates heavily rely on trade with its member states. The UK, being one of the most significant exporters to the EU, has left a significant gap. This gap is compounded by several structural issues within the EU.

Trade disruptions are a major concern, not just due to tariff barriers but also due to the loss of access to UK waters for fishing. Forty percent of the EU’s fish is sourced from UK waters, and this will now involve additional costs or licensing fees, increasing seafood prices across the EU.

Brexit has also exposed the EU's budgetary issues, particularly the funding imbalance. Before the UK left, it contributed significantly to the EU budget. Without this contribution, the EU's ability to balance its budget has been severely affected, putting additional pressure on net contributor states to raise their contributions. This tension could further strain the EU’s already fragile economic balance.

Political Consequences of Brexit

Politically, Brexit has had far-reaching impacts. The UK's pragmatic stance as a partner to the EU has been replaced by a more aggressive stance by other EU members, such as Germany and the Netherlands. Southern states are now in a stronger position to negotiate more favorable terms, while net beneficiary states like France and Italy are increasingly concerned about their funding.

The EU has faced significant economic challenges even before the arrival of the coronavirus pandemic. The banking system is struggling, and the negative effects of the euro on southern economies are coming to the forefront. The need for a debt union to strengthen the single currency is clear, but Germany, which would bear the most significant burden, is resisting.

The inability to form effective alliances in times of crisis, as seen with the recent PPE shortages and border closures, raises questions about the long-term viability of the EU. While some see Brexit as a significant problem for the EU, others argue that it is a symptom of deeper, existential issues.

In conclusion, the departure of the UK has had multifaceted implications for both the Netherlands and the EU. While there have been some positive developments, such as job creation and strategic shifts in trade focus, the overarching economic and political landscape remains complex and demanding.