The executive summary from
NExit: Assessing the
economic impact of the Netherlands leaving the European Union (pdf-link)
Report prepared by Capital Economics
Inside the European Union, the Netherlands
is destined for rates of economic growth not only lower than those that are
commonplace on every other continent of the world, but also lower than achieved
domestically in recent decades. But outside the European Union, Dutch
authorities could
- reduce the costs of doing business in the Netherlands by a minimum of €20 billion annually by 2035 through ‘renationalising’ regulations in areas currently in the jurisdiction of Brussels institutions
- improve public finances by opting out of European Union spending programmes, which should add a cumulative €240 billion to gross domestic product by 2035,
- reduce public expenditure by a minimum of €7.5 billion annually (by 2035) through revising immigration policy to focus more tightly on admitting only those who make an economic contribution
- grow exports to non-European markets faster by negotiating and trading with high growth emerging economies without being tied to a common trade policy
- manage cycles in the macroeconomy more effectively by having the freedom to set monetary and fiscal policy to fit Dutch national conditions, and not the euro-zone as a whole. Netherlands-focused policies may help address the current economic crisis, and should see the economy accumulate €309 billion extra national income by 2035.
There are economic costs to leaving the European Union,
particularly in relation to replacing the single currency with a national one.
But these costs are modest and manageable. Moreover, fears that introducing a new
guilder may prompt a structural revaluation of the Dutch currency against the
euro (and other currencies) are, we believe, unfounded. We find little evidence
to suggest that, beyond initial and temporary market volatility, the new
guilder will either appreciate or depreciate substantially. As such, NExit is
no threat to banking stability, or to the Netherlands’
sovereign debt or pensions positions.
Overall, the various strands of analysis point to NExit
being a long-term benefit to the Dutch economy and, more than likely, a short-term
help in easing the Netherlands
out of its current economic ills.
For a NExit which is assumed to be announced on 1 January 2015, a Swiss-like relationship
between the Netherlands
and the European Union should see Dutch gross domestic product somewhere
between 10 and 13 per cent higher by 2035 than it would have been had the Netherlands
continued as a member of the Brussels-led bloc.(See below ) Over that 21 year
period, the benefits of NExit to Dutch national income would have accumulated
to between €1,100 billion and €1,500 billion in today’s prices. (See 3 below .)
This is equivalent to between €7,100 and €9,800 per household each year. But even
if the Netherlands
is unable to negotiate a status akin to Switzerland’s,
the economy would be better off out of the union than in. Although there are
margins of error associated with any research of this nature, we have stress
tested our other key assumptions, and find our broad conclusions robust.
There are, of course, risks to leaving the union – and these
need to be recognised and addressed by anyone considering NExit. But there are
also significant risks to staying in a bloc with a fundamentally flawed
currency and the threat that transfers to debt-laden peripheral states will spiral
out of control. In this instance, our analysis shows that the Netherlands would
be better off taking control of its own destiny, rather than sticking with the
‘devil it knows’.