Brexit could cost the Spanish economy as much as €4 billion, a leaked report from the government in Madrid has warned.
The loss of exports to Britain could alone be valued at between €500 million and €1 billion if Theresa May’s government adopts a hard Brexit, the report concludes. The exit from the single market of one of Spain’s leading trade partners will mean the “economy will suffer negative consequences”.
Gibraltar will be cut off from Europe after Britain exits the European Union, the Spanish government — which claims sovereignty over the British overseas territory — believes, but it is unlikely that those entering Gibraltar from Spain will be forced to show their passports or will have to get visas.
Madrid wants to support the free movement of people, despite Mrs May’s attempts to limit migration to the UK.
In this respect, Spain may support striking a bilateral deal with the UK over citizens receiving state benefits in their respective countries.
Of the 286,000 Britons registered with authorities in Spain, 172,000 are working age and 44,000 pay into the Spanish social security system. There are also 105,000 British pensioners with access to healthcare.
About 10,000 Britons receive state benefits in Spain, while in the UK only 4,200 Spaniards are eligible to draw benefits.
After Brexit the ability of Spaniards to work and live in the UK will also be affected in areas involving issues of law and order, industries like agriculture and fishing, and attaining university places, says the report, which was first reported by El Pais newspaper.
“Brexit could have consequences for Spanish footballers playing in Britain,” it adds.
Santí Cazorla, of Arsenal, Juan Mata of Manchester United and David Silva of Manchester City are among the Spanish stars who play in the Premier League. However, the report does not explain how these players could be affected.
Spanish industries including food and drink, tourism and large companies with a presence in Britain like Telefónica, Iberdrola and Banco Santander may suffer.
The report is from the office of Soraya Sáenz de Santamaría, the Spanish deputy prime minister, who is leading Brexit negotiations for Spain.
“At the end of the process, Britain will not be in a better situation out of the European Union than in,” the report concludes.
“But if Britain does not play dirty, the best [scenario] will be that we do not cause ourselves mutual damage.”
It predicts the most likely outcome will be that Madrid will strike a bilateral trade deal with London.
Despite this, Spanish exports to the UK will be damaged in key industries like carmaking, food and drink and pharmaceuticals.
The fluctuations of the pound against the euro will also affect tourism, the report says.
Last year the number of Britons visiting Spain rose by 12 per cent to 17.8 million and early bookings for 2017 show this pattern might be repeated.