⁍ Deutsche Bank analysts estimate that the costs to trade between Britain and the European Union will be high.

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⁍ ‘Tariffs make up only a small part of the direct trade cost from leaving the EU,’ the analysts wrote in a note.

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⁍ They expect both the UK and EU economies to grow next year, deal or no deal.

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– Britain is expected to exit the European Union with a deal in place by the end of the year, but analysts at Deutsche Bank say the costs of doing so will be high even if a deal is reached. “Tariffs make up only a small part of the direct trade cost from leaving the EU,” the analysts write, per Reuters. “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.” Deutsche Bank expects Britain to agree on a Canada-style trade deal in the coming weeks, which is referred to as a Free Trade Agreement. Such a deal would knock 0.6% off Britain’s gross domestic product with a cost of 0.2% to the EU’s GDP, the analysts say. Malta, Luxembourg, and Ireland will be the hardest hit in Europe from the Brexit costs, while the “big four euro area economies will all face below-average costs.” However, “while in any other year, the trade shock from Brexit would likely result in a yearly contraction, we expect both the UK and EU economies to grow next year, deal or no deal,” the analysts say. That’s because the trade costs “are small compared to the rebound expected from the economic recovery associated with coming out of lockdown.”