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Courtesy of the Telegraph
German business is seriously worried about the prospect of a no-deal Brexit. Scarcely a day passes without a new warning from business leaders. The car industry trade body, the VDA, says no deal could have “fatal” consequences, while the Federation of German Industry (BDI) says it would be a disaster that could cause a “massive crisis”. But, despite the alarm, so far German business has remained solidly behind the negotiating position of Angela Merkel and the EU-27. There is no sign of the carmakers pressuring the Chancellor to cave to British demands in order to safeguard their exports, as Brexiteers have long predicted. Rather, much of the German business community appears to view the likelihood of no deal as the result of British intransigence — and look to London, not Brussels or Berlin, to solve the impasse.
A chaotic Brexit is getting dangerously close. Businesses on both sides of the English Channel are hanging in the air. The priority must be to avoid a hard Brexit. British politics has to live up to this responsibility,” says Joachim Lang, BDI director-general. “The cohesion of the EU-27 is the top priority for the German industry. We support the EU's negotiating line. The ball is in London’s court.”
Despite its rejection by the House of Commons, Mr Lang describes Theresa May’s withdrawal agreement as “the best possible outcome of negotiations for both the EU and the UK” and rejects any attempt to renegoatiate it.
“The already ailing German-British trade figures show further uncertainty about the process is poison for the economy,” he says. There is no doubting the significance of the UK market for the German economy. Britain had a trade deficit with Germany of £21bn, out of a total trade volume of £134bn, in 2017. As Mr Lang says, Brexit is already having an effect. German exports to the UK fell by more than €1bn in 2017 compared with the previous year, and Britain, once Germany’s third-largest market, slipped to fifth place. But the consequences of a no-deal Brexit could be far more serious. In a worst case scenario, German exports to the UK could plunge by 57pc — some €44bn — according to a report by the respected IW Institute in Cologne last year.
Much of the trade between the two countries is interlinked — for instance in car parts — and there are fears a serious drop could have far-reaching effects for the entire EU economy. It is not only German industrial giants like the carmakers who will be affected. The consequences could be even more serious for the Mittelstand, the small- and medium-sized enterprises that make up the backbone of the German economy. “Long-term business relationships between companies from both countries are in danger from a no-deal-Brexit,” says Marc Tenbieg, managing director of the German Mittelstand Association (DMB). “German SMEs have built up intensive and trusting business relationships with British companies over many years on the basis of stable political and economic conditions. It’s detrimental for both countries if functioning market and trade structures are frivolously endangered by volatile political decisions.”
German exports to the UK fell by more than €1bn in 2017 compared with the previous year
But Mr Tenbieg also declines to blame Brussels: “The EU’s position has been consistent throughout the negotiations: a regulated Brexit was always the declared goal, but not at any price. The deal negotiated between Brussels and London was a good and solid basis. “The only thing you could hold against Berlin is that the risk of no-deal was ignored for too long. Now it seems that SMEs have to set up emergency plans within a few weeks. e adds: “Mrs May’s policy management appears very erratic: the details of the withdrawal agreement weren’t even known until November 2018. Dialogue with her MPs should have taken place much earlier. To us, it makes no sense that it didn’t, especially with such a narrow majority. Neither does the strategy of renegotiating after such a lengthy negotiation.”
