LONDON (Reuters) - The Czech Republic, Poland and Hungary face being hit hard by Brexit, a new ING report estimates, as changes to key supply chains and a drop in expat worker remittances compound what could be a 20 percent cut in the countries' EU funding.
The Dutch bank's report, published on Tuesday, said the carmaking, agriculture and textiles industries would suffer the most from potential disruption arising from Britain's planned withdrawal from the European Union in March 2019.
Britain is Poland's second largest export market and Poland maintains a large trade surplus with the UK worth just over 8 billion euros ($9.02 billion) a year.
Both Hungary and the Czech Republic meanwhile are exposed to British demand for vehicles, with 0.2 percent and 0.3 percent of the respective GDP linked to value added exports to the UK.
The biggest threat, though, will be what Brexit could mean for the 2021-27 EU budget, discussions around which are already taking shape, the ING report indicated.
Currently, Britain contributes around 6 percent of the EU’s budget but its departure will also see average EU GDP per capita levels decline.
That will mean Poland, the Czech Republic and Hungary's GDP per capita levels are no longer below the average and the funding they receive will therefore most likely get cut.
"This and fresh priorities will have profound implications for the 2021-27 budget round, potentially delivering 20 percent plus declines in real terms for the likes of the Czech Republic, Poland and Hungary," ING estimated.
Any extension in the Brexit transition period beyond 2020 would soften that figure somewhat, it acknowledged, but the money central European-born workers living in Britain send back to their homeland, known as remittances, is also likely to fall.
Britain plans tighter controls on immigration after Brexit.
Poland is the largest recipient of remittances with total inflows of 1 billion euros a year. Romania, Hungary, the Czech Republic and Bulgaria are all quite far behind at 0.3, 0.15, 0.14 and 0.07 billion respectively.
But there are nuances there too. Many Polish workers have been in Britain for more than 10 year, meaning they will not have to leave after Brexit.
"Romania may be more exposed from a decline in remittances than Poland, since the Polish presence in the UK workforce is more mature," ING said.
The report noted that some western EU states could also suffer from Brexit, with the Netherlands relying for 3.44 percent of its GDP on British demand, 1.5 times the EU average.
Ireland is also exposed, with its central bank forecasting that if Brexit were to leave British-Irish trade governed by World Trade Organisation rules for countries with no bilateral deals, Ireland's gross domestic product (GDP) would decline 2.9 percent lower in the long run.
(Graphic: Brexit impact on CEE EU funds - https://tmsnrt.rs/2PriJqH)