ING bank: Brexit will stunt Dutch economic growth

By Janene Pieters on June 29, 2016 - 11:10
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The Union Flag on the Palace of Westminster in London (Photo: Ввласенко/Wikimedia Commons). The Union Flag on the Palace of Westminster in London (Photo: Ввласенко/Wikimedia Commons)

The United Kingdom's decision to leave the European Union will likely do "substantial damage" to the growth of the Dutch economy, ING Economic Bureau said on Tuesday. The bank lowered its economic growth forecast for 2016 from 2.1 percent to 1.8 percent and for next year from 1.9 percent to 1.3 percent, ANP reports.

"I want to put the economic pain in perspective, we do not expect a recession, but less economic and employment growth than we previously thought", Marieke Blom, chief economist at ING Nederland, said.

ING expects that Dutch wholesalers will feel the consequences of a the most, because of the exports going to Britain comes from wholesalers. More than 10 percent of re-exports from the Netherlands go to the United Kingdom.

The Brexit also made consumers more negative about the Dutch economy, which will affect growht in the hospitality- and retail industry.

The exact consequences will depend on the consequences of an eventual trade agreement. "Looking ahead is very difficult", Blom said. "One thing we do know: uncertainty and economic growth do not mix."

Credit rating agency Fitch also thinks that the Netherlands is one of the six EU countries that will be most affected by the Brexit consequences. The other countries are Ireland, Malta, Belgium, Cyprus and Luxembourg. This is because a large part of these countries' exports go to the UK.

Nearly 4 percent of the Netherlands gross domestic product and 300 thousand jobs are dependent on the United Kingdom. Another problem is the fact that the pound is under pressure against the euro, making Dutch products more expensive to the British.

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