Brexit smiles on the Dutch — so far

Brexit isn’t shaping up too badly for the Netherlands.

In a nail-biting climax Monday evening — eventually decided by picking a name out of a bowl — Amsterdam triumphed in the race to host the prestigious European Medicines Agency (EMA) once it leaves its current home in London’s Canary Wharf post Brexit.

That will bring around 900 desirable jobs, tens of thousands of visitors and an institution considered one of Brexit’s greatest prizes into Dutch hands.

In other ways too, Brexit is so far proving a boon for the Netherlands. Amsterdam has been scooping up jobs from smaller financial firms, particularly algorithmic traders. That has swelled its banking sector as uncertainty hits the City of London and financial services firms seek to build their presence in other European cities.

Unexpected boom

All this may come as a pleasant surprise to the Dutch. In the immediate aftermath of the U.K.’s vote to leave the EU, the Netherlands’ physical proximity, as well as cultural and economic closeness to Britain, seemed like it might put the country at a particular disadvantage.

“The choice of Amsterdam means that the EMA can continue its important work undisturbed after Brexit” — Minister for Medical Care Bruno Bruins

A report published by Dutch public think tank the Netherlands Bureau for Economic Policy Analysis just ahead of the Brexit referendum in June 2016 calculated that Brexit would cost the Dutch economy 1.2 percent of GDP by 2030, or up to €10 billion. Along with Ireland, Luxembourg and Belgium it is among the EU countries most exposed economically to Brexit.

But those factors that make the Netherlands economically vulnerable have also proved to be an advantage when claiming the spoils from Britain’s decision to leave. The Dutch EMA lobbying push promoted Amsterdam as an easy transition for the agency’s staff and their families — reachable by train from London, largely Anglophone and culturally familiar.

Politically too, Brexit has had the effect of muting a shrill domestic Euroskeptic debate, as the Dutch have watched how its ramifications have played out. Ahead of the country’s general election in March, Nexit looked like a distinct (if marginal) possibility, with Geert Wilders’ Freedom Party seemingly the inevitable beneficiary of a populist wave across the Continent.

But the British result failed to give him momentum, and the Freedom Party under-performed while pro-European parties made gains.

“If there is one thing the Dutch do not like, it is economic uncertainty. [Brexit] has made Dutch people [who were] considering that we should be taking the same kind of step think twice. It has really brought the consequences of leaving the EU into very sharp relief,” said Michiel van Hulten, former Dutch Labour party MEP and founding partner of consultancy boldT.

He said the successful EMA bid will have reinforced that message. “The fact that the Dutch lobby for the European Medicines Agency succeeded showed that cooperation works,” he added. “It serves as a double message.”

Dutch political leaders have been quick to herald the EMA win. “The choice of Amsterdam means that the EMA can continue its important work undisturbed after Brexit,” Minister for Medical Care Bruno Bruins said in a statement.

Foreign affairs minister Halbe Zijlstra called it, “wonderful for the Netherlands … It shows that we can act decisively on the effects of Brexit.”

But the Netherlands’ success will create its own problems. “Amsterdam is one of the fastest-growing housing markets in the Western world,” said Christian Lennartz, senior housing economist at RaboResearch Netherlands. “Property prices are already under heavy pressure.”

House prices have been steeply increasing since 2014, led by Amsterdam where prices rose over 15 percent last year, according to Rabobank research. The new EMA workers are likely to load yet more pressure onto the section of that market that is already hottest: unregulated rentals. Affordable rents for people earning under €43,000 a year are regulated in the Netherlands. Most EMA workers are likely to be on salaries above that.

“There is high scarcity in that segment, and it’s going to add pressure,” Lennartz said, adding that the Amsterdam municipal government would need to quickly speed up house building plans to cope.

“If the city doesn’t adapt to these changes, it’s just going to become more overcrowded and pricier.”

Dutch trade worries

In any case, the post-EMA glow may be short-lived.

If the Brexit talks produce an eventual deal that restricts trade between the U.K. and EU, then the Netherlands is bound to take a hit because of its close economic ties to Britain.

Winand Quaedvlieg, head of the Brussels office of the Confederation of Netherlands Industry and Employers, is pessimistic about Brexit’s eventual impact. “There are certain positive effects but there is no way that these limited positive effects would compensate for the large damage for many companies and many sectors because of Brexit,” he said.

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