If the UK leaves the European Union without a deal, it could cost each Icelander ISK 13,000-22,000 ($107-180/€95-161) per year, according to a German study on the economic effects of Brexit. The study, carried out by Bertlesmann Stiftung, found the UK’s departure from the EU to have negative consequences both for the United Kingdom and all countries belonging to the European Economic Area. Kjarninn reported first.
Soft Brexit would mitigate impact
Bertlesmann Stiftung’s report asserts Iceland’s economic losses as a result of Brexit could amount to a 0.3% drop in GDP, or around ISK 22,000 ($180/€161) per resident per year in the case of a “hard Brexit” (departure with no deal). If the UK leaves after negotiating an agreement with the EU, however, those losses would be mitigated and would amount to a 0.18% contraction in GDP and a loss of ISK 13,000 ($107/€95) per person per year.
Iceland would not be among the countries hardest hit by UK’s departure: Ireland, the Netherlands, and Belgium, would face a sharper economic downturn from the event, though Iceland and Norway, due to their proximity to the UK and high productivity, would experience high risk if an agreement is not reached between the UK and the EU regarding the former’s departure, the study predicts.
Worst-case scenario unlikely
According to Iceland’s Ministry for Foreign Affairs, the government has been working hard to secure key interests that would be impacted by Brexit, and has made agreements with UK authorities on issues such as continuing rights of residents, trade, and aviation.