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The Bank of Spain in Madrid.
Central bank warns Spain will be the EU country most affected by Brexit

Central bank warns Spain will be the EU country most affected by Brexit

A study by the Bank of Spain also found that the UK will be more negatively affected by the split than the EU

EDURNE MARTÍNEZ

Friday, 11 December 2020, 11:01

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On the same day that the UK government announced Brexit negotiations had reached a "very difficult" stage, the Bank of Spain published a report that predicted that the UK would suffer much greater negative consequences than the rest of the EU as result of Brexit.

The report predicts a reduction in the UK's GDP of between 1.5 per cent and three per cent for 2022, compared to 0.4 per cent in the worst-case scenario for the EU.

However, the worst consequences for the EU will be felt in Spain, the report concluded. With the pandemic taking resources away from transition arrangements, the two countries' financial and commercial relations are set to be affected, especially if there is a no-deal Brexit and the UK opts to trade on World Trade Organization (WTO) rules.

Particularly affected by the sudden imposition of tariffs and quotas on goods will be Spanish exports of foodstuffs, tobacco and industrial intermediate goods.

What's more, in 2019, one in five tourists coming to Spain were from the UK, while the British were the biggest foreign buyers of property in the country.

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