In 2018, the value of Danish exports of services to the UK surpassed the exports of goods. This was primarily driven by a surge in Danish installations of offshore wind turbines in UK waters in recent years. The UK is one of the largest trading partners for Danish services trade. In 2019, the UK imported 9% of Denmark’s total exports of services, and the UK represented 11% of Denmark’s total imports of services.
Brexit will lead to an increase in barriers to trade between Denmark and the UK. Some barriers will appear in the short term while others are likely to build up over time, as the UK leaves the EU Single Market which ensures the free movement of goods, services, capital and persons. Increased trade barriers will have a negative impact on Danish services exports to the UK, both from direct barriers to services trade, and indirectly from decreased goods trade which lowers the demand for e.g. shipping and after-sales services.
However, negotiations are ongoing between the EU and the UK to reach an agreement on the future relations. In our report, we analyse the impacts on the Danish service sector’s trade and output in four different scenarios for the future relationship between the EU and UK after Brexit. We find that a far-reaching agreement based on the revised political declaration will limit the negative impact on Denmark’s long-term GDP by 50-75 percent, compared to a “no deal” scenario.
For further information, please contact Erik Dahlberg