The research group said the EU businesses supply chains would be hit badly if there was a no-deal Brexit.
It claimed a hard Brexit would cost the UK economy £120 billion by 2020.
The report from Oxford Economics highlights the risks for both sides should the UK be forced to fall back on World Trade Organisation rules.
If countries were to fall back on WTO rules, there would be greater costs from trade tariffs and there would be a slower movement of goods across borders.
The report said: “The supply chain impacts will lead a loss in collective gross output of the remaining EU countries of up to €62bn or 0.3pc below our baseline forecast in 2020, in addition to the €50bn or 0.2pc of gross output lost due to the direct impacts.”
Neal Kilbane of Oxford Economics said: “We don’t think that the pound has much more scope to lose value, as it is already undervalued by most measures. In addition, UK exports don’t tend to be price sensitive in nature to respond to by the required amount to offset the additional costs.”
Germany would be particularly vulnerable to a supply chain shock as its businesses make up one in 10 of all goods used by European companies in their production processes.
The countries of Ireland, the Czech Republic and the Netherlands would be most affected.
The research comes as the UK prepares to enter the second round of Brexit negotiations.
Both sides of the negotiating table will be clarifying future trading relationships.
This comes as a critical Brexit law has been cleared in the House of Commons.
Following tonight’s vote, the legislation will undergo a new round of scrutiny in the House of Lords.