A Hard Brexit Could Cost Denmark 1% in Lost GDP, Minister Says

(Bloomberg) -- A hard Brexit could cost Denmark as much as 1 percent in lost gross domestic product, the economy minister said in Copenhagen, as he urged one of the Nordic country’s biggest trading partners to reach an amicable divorce deal with the European Union.

“Brexit is the most visible threat to the Danish economy,” Economy Minister Simon Emil Ammitzboll told Bloomberg on Monday.

A U.K. departure from the EU on World Trade Organization terms -- a so-called “Hard Brexit” -- would cost each Dane an average of 4,300 kroner ($650) in lost GDP per capita, according to a report by the ministry. The so-called “Norway-Plus” option -- which would see Britain remain in the European single market -- would trigger a drop of about half that size.

Those figures show that Denmark could be “hit hard,” the minister said. “That’s why I’m still hopeful that we’ll get a deal, or that the British will change their minds and get some kind of ‘remain’.”

Ammitzboll was speaking after the government cut its forecasts for this year and the next, citing cooling international trade and uncertainty about Britain’s exit. Denmark last year did about as much business with the U.K. as it did with the U.S. According to Ammitzboll’s office, trade with Britain contributes around 2.8 percent to Danish GDP.

As a relatively small and open economy, Denmark is highly dependent on trade. That explains the minister’s concerns about the increasingly isolationist signals coming out of not just the U.K., but also countries like the U.S. and Italy.

“In the long run, these countries won’t gain anything from their policies and will only hurt themselves,” Ammitzboll said.

One of the potential sticking points that may emerge when the U.K. starts discussing its future relations with the EU after Brexit is access to British waters by Danish fishermen. Between 2012 and 2016, Danish catches in U.K. waters were worth as much as 1 billion kroner, equivalent to a third of all Danish catches.

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