No-deal Brexit fears set off alarm bells across German businesses






Britain's exit from the European Union was already going to cost German business billions of euros. But now German industry fears facing the incalculable consequences of a no-deal Brexit.

Berlin (dpa) – For many Germans, Britain is a rather mystifying place with events there often dismissed as happening "auf der Insel" - which translates as "on the island."



 
German commentators regularly marvel at the British sense of humour and love to trot out one of the more memorable royal quotes: "We are not amused."
But the tone is less tongue in cheek these days with Britain's deepening Brexit crisis sending shock waves across German businesses. There's real risk that one of its major trading partners might crash out of the European Union as a result of the much feared no-deal scenario.
"Brexit threatens to have a massive impact on the German economy," said Eric Schweitzer, who heads the Association of German Chambers of Commerce and Industry (DIHK). "This can lead to the loss of jobs and prosperity," he said in Berlin.
Britain is Germany's fifth-largest trading partner, where nearly 750,000 German jobs are directly dependent on exports to the country.
Trade with Germany helps employ about 400,000 people in the Britain and contributes nearly 120 billion euros (135 billion dollars) to the British economy.
But despite the close economic ties, German officials have privately expressed amazement at the failure of British Brexit negotiators to fully grasp the consequences of the decision to exit the EU or the processes for ending their membership of the Brussels-based bloc.    
Monday's failure of the House of Commons to agree on any alternatives to the government's Brexit plan has only served to heighten the tension among German business leaders over the scale of the potential economic fallout from Britain departing the EU.
With none of the four options securing a parliamentary majority, EU chief Brexit negotiator Michel Barnier warned that a no-deal Brexit is now "more likely" but could still be avoided.
"The political impasse continues," said Joachim Lang, the general manager of the Federation of German Industry (BDI). "The tormenting uncertainty continues for companies."
German business has already been counting the costs of Britain's June 2016 referendum to leave the EU. The BDI expects the loss of business for German industry as a result of Brexit to hit 17 billion euros this year.
But now looming large over the Brexit chaos is the threat of the British government calling what would likely be an unpredictable snap election and which would be mounted against a virtual civil war in the political establishment over leaving the EU.
Frankfurt - along with other European financial centres - has emerged as rare winners of Britain's move to exit the EU.
Germany's Federal Financial Supervisory Authority has predicted that more then 45 London banks will set up shop in Frankfurt if Brexit goes ahead.
The result has helped Frankfurt take a step towards fulfilling its dream of becoming Europe’s top financial capital.
But Britain's departure from the EU could leave a big hole in both German and British foreign trade.
"A no-deal does not just mean traders facing customs duties, but would also temporarily bring trade between the EU and the UK to a standstill," said former president of the Kiel Institute for the World Economy (IfW) Dennis Snower.
Despite decreasing over the last three years, British exports to Germany totalled 82.01 billion euros in 2018.
The BDI believes that a hard Brexit would mean the German economic growth forecast for 2019 would shrink from 1.2 per cent to 0.7 per cent.
Britain is also the second-biggest destination for all German exports after the US with about every fifth car produced in Germany sold in the country, highlighting the sense of dread among German carmakers about a no-deal scenario becoming a reality.
German carmaker BMW's four British manufacturing plants are now idle so as to avoid any supply bottlenecks in production in the event of Brexit chaos.
"Without orderly and workable solutions for the flow of commerce, jobs in the automotive industry, especially on the British side, are at stake," said Bernhard Mattes, the chief of the German Association of the Automotive Industry (VDA).

Tuesday, April 2nd 2019
By Andrew McCathie,
           


New comment:
Twitter

News | Politics | Features | Arts | Entertainment | Society | Sport