Deutsche Bank analysts have predicted Malta, Luxembourg and Ireland will pay the heaviest price for Brexit. Financial experts at the banking group insist the consequences will also be felt across Europe’s largest economies, including Germany and France.
They warn “big four euro area economies will all face below-average costs”.
Brexit talks between the UK and the European Union remain on the brink following a stalemate at last week’s crucial European Council summit.
Deutsche Bank insist even if a breakthrough is made before the end of the transition period, the cost of trade between the two sides will increase.
The UK will leave the EU customs union and single market and the German Bank has highlighted the potential impact of non-trade barriers – which could arise from restrictions on goods and services.
In a statement analysts from Deutsche Bank said: “Tariffs make up only a small part of the direct trade cost from leaving the EU.
“Of more significance is the prevalence of non-tariff barriers.
“These will weigh on trade regardless of whether the UK and EU trade on preferential terms or not.”
Despite the ongoing impasse between the UK and Brussels, Deutsche Bank ultimately expects a Canada-style free trade deal to be reached.
They forecast such an arrangement would shed 0.6 percent off Britain’s gross domestic product (GDP) with a cost of 0.2 percent to the EU’s GDP.
With global economies reeling from the coronavirus pandemic, experts predict both economic will bounce back next year regardless of any formal trade agreement between the UK and EU.
Downing Street confirmed the latest round of “intensive” negotiations will continue until Sunday October 25.
A Number 10 spokesman said: “Intensive talks are continuing and they will continue over the weekend until the 25th.
“We’ve published a set of principles for handling these intensified talks and they will continue over the weekend.”