Pastures new
The Dutch are sowing seeds in new markets to hedge against risk of chaotic Brexit
Chaos. Disaster. Costs.” These are all words Dutch businesses use to describe how Brexit will hit their trade with the UK. The Netherlands, seen as one of Theresa May’s closest European allies, has a lot to lose, particularly in the event of a disorderly departure.
Trade with the UK makes up 3.1pc of GDP for this nation of merchants, which is the world’s second largest exporter of agricultural products and ships all kinds of goods through Europe’s largest port of Rotterdam.
The UK is the Netherlands’ second largest export market after Germany, buying everything from mobile phones (the most exported product during 2017) to fruit and vegetables, meat, plants and holding company services.
The trade involves 218,000 Dutch jobs, according to the country’s statistics office, and greenhouses full of tomatoes and flowers destined for British homes stretch over huge tracts of the flat country.
Ever since the announcement of Brexit, business leaders such as Hans de Boer, president of VNO-NCW, the Dutch confederation of industry, have been lobbying to maintain strong links. The LTO farmers’ union predicts “chaos on March 30” if politicians don’t stop their “game of chicken” and make a deal.
“Economists estimate that the no-deal scenario for the Netherlands will cost half a percentage point of economic growth this year,” Mr de Boer tells The Daily Telegraph. “There will be substantial WTO tariffs and extra checks and delays at the border.
“It will lead to restraint in purchases and investments, and a sharp weakening of the British pound will affect Dutch businesses too. We have set up an extensive campaign to urge our members to prepare seriously for a worst-case scenario.”
They aren’t the only ones. In October, Mark Rutte, the Dutch prime minister, said that his country had “made more preparations for a no-deal than the United Kingdom”.
Last week the customs office wrote to the 72,277 business that trade with the UK to warn them to get the right export paperwork in place now to treat Britain as a “third country” outside the EU bloc.
Meanwhile the Dutch parliament is arguing heatedly about controversial legislation that would give the government emergency powers to amend laws quickly and reduce the impact of a UK crash-out.
For Henk Raaijmakers, whose firm De Oude
AA exports €250,000 (£220,000) of plants to the UK each year, the trade represents 25pc of turnover.
“We are worried,” he says. “Now, we send two to three times a week to the UK in 24 or 48 hours.
“If there’s a no-deal, it could take four to five days with paperwork, queues and quarantine, so we would need to keep stock in the UK. We are trying to get as much as possible there before March 29.
“The British economy will also drop and our product is a luxury product, so we expect to lose a big market with a no-deal [outcome].”
His business is looking to develop markets such as Poland to compensate. LTO senior policy adviser Klaas Johan Osinga says other farmers will follow suit.
“The need for paperwork is a cost, inspections cost money, and regulation at the ports authorities will all add up,” he says. “Businesses may take a second look at the UK as a less interesting market, and look at other ones.”
It’s not so simple for everyone, according to Prof Roel Beetsma of the University of Amsterdam, who has co-written a paper on the economic impacts of different Brexit scenarios on the Dutch economy. “It’s not only trade,” he says.
“What people aren’t aware of is that we have €200bn to €250bn invested in the UK as direct financial investments.
“If the UK economy is hurt severely by Brexit, this will affect the value of those investments in many sectors.”
The Netherlands, the largest contributor to EU budgets per head of population, also expects to have to pay €1.6bn extra in the next two years if there is a hard Brexit.
“The British economy is 15pc of the EU economy so the other countries would probably have to pay €10bn more, if the EU budget is going to stay the same,” says Prof Beetsma.
There’s a small upside. The Netherlands Foreign Investment Agency (NFIA) has been working hard at persuading British and international firms that the Netherlands could be their new base in Europe.
So far, the initiative has attracted the European Medicines Agency, Sony, Panasonic, and is even courting the BBC.
“The Netherlands is a haven from Brexit,” says Michiel Bakhuizen of the NFIA. “Not just for companies located in the UK but those in Asia and the Americas who would normally locate in the UK but look to the Netherlands now as their base for the European market, with multiple clusters of expertise and logistical [possibilities] to protect the chain of goods and services.
“Brexit is absolutely not something we welcome. But once it chose the Brexit path, the Netherlands is a good location for companies looking to keep their links with Europe.”
Still, says the grower Raaijmakers, breaking with Britain will be a wrench. “It’s like we are separating after a marriage,” he says. “We can still talk, but it will never be the same.”
‘It’s like we are separating after a marriage. We can still talk but it will never be the same’