Business associations and banks warn: the approaching Brexit catastrophe costs billions – and the British more than the virus crisis
The Brexit negotiations are progressing, but a solution is not being approached: The possibility of a hard Brexit is becoming more and more likely. Business associations are worried about this prospect: They fear billions in costs. For the British, this scenario could be more costly than the Corona crisis, warns a US investment bank.
Against the background of the worsening Brexit dispute between the EU and Great Britain, the German economy is warning of losses worth billions within a few months. “For the automotive industry alone – which has the largest share of the trade volume between Germany and Great Britain – there is a threat of tariffs of at least two billion euros in less than four months without an agreement,” said the chief executive of the German Chamber of Commerce and Industry (DIHK), Martin Wansleben, the “Augsburger Allgemeine” from Monday. “There is growing concern in the economy that the Brexit negotiations will fail,” he emphasized, speaking of a “new uncertainty”.
Hard Brexit results in losses of “up to 110 billion euros by 2025”
The automakers called on the EU and the UK to reach an “ambitious free trade agreement” “without further delay”. A “no deal” scenario would mean “combined EU and UK trade losses of up to 110 billion euros by 2025 “In a statement by more than 20 organizations signed by the German Association of the Auto Industry and the European umbrella manufacturer association Acea, among others, the losses would add to the 100 billion euros that the industry recorded as a result of the Corona crisis.” have.
In the event of a hard Brexit: Infrastructure for customs clearance is still missing
London and Brussels are currently unable to agree on the concrete implementation of the exit agreement and a treaty on economic relations from 2021. There is a risk of a hard break and “there is a lot at stake for the economy on both sides of the Canal”, warned Wansleben.
In addition to high tariffs, disrupting supply chains and long waiting times at the borders are to be feared, as there is still no functioning infrastructure for customs clearance on the British side.
Exports are falling continuously – Corona crisis makes everything worse
“The Brexit uncertainties of the past have already left their mark,” said Wansleben. “Since the referendum in 2016, German exports to the British island have fallen noticeably – from 89 billion euros in 2015 to 79 billion euros in 2019.” As a result, the United Kingdom slipped from third place to fifth place among Germany’s most important export markets .
“The trend continues this year – and is exacerbated by the Corona crisis. Between January and July, German exports fell by almost 22 percent compared to the previous year, ”said the DIHK managing director.
Four specific demands to avoid a Brexit disaster
It is all the more important for companies that future relations between the EU and Great Britain are regulated with clear priorities, demanded Wansleben. Specifically, politicians should ensure that they can “hold the EU internal market together, avoid tariffs, maintain transport routes and keep the bureaucracy in the exchange of goods as low as possible”.
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Car manufacturers are also warning of no-deal Brexit
The European auto industry is also sounding the alarm and warning of billions in costs in the event of a Brexit without a trade agreement. According to new calculations, the EU and British car industries would suffer a total of 110 billion euros in losses over the next five years in the event of a “no deal”, said the European industry association Acea.
Acea emphasized that without a contract, both sides would have to adhere to the requirements of the World Trade Organization (WTO) from January 1, 2021. According to this, 10 percent import duty would be due for cars and up to 22 percent for delivery vans and trucks. “Such tariffs – far higher than the low margins of most manufacturers – would almost certainly have to be passed on to consumers, which makes vehicles more expensive, reduces choice and affects demand,” said the message, which was also published by the German industry association VDA was signed.
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Goldman Sachs: no-deal Brexit for British economy worse than Corona
Meanwhile, the British are also threatened with immense damage in a no-deal Brexit, which analysts at the investment bank Goldman Sach say will be greater than the consequences of the coronavirus crisis. The reported the stock exchange portal “CNBC” with reference to an analysis of the bank.
Some analysts assume that the economic consequences of a hard Brexit in the midst of the damage caused by the pandemic would hardly be apparent. The Goldman analysts disagree: “We are skeptical of the argument that the sheer extent of the economic damage caused by Covid-19 obscures the effects of a collapse of the Brexit negotiations.”
Rather, Goldman Sachs sees a no-deal Brexit as an even more important factor for the British economy. According to the bank, an exit without an agreement would affect sectors of the economy that are very different from the pandemic, such as the chemical and textile industries. Taken together, the “long-term effects, should a trade agreement between the EU and Great Britain fail, are likely to be two to three times greater than the damage that the corona crisis has caused so far”.
This is how FOCUS Online users commented on this article:
- “The British are playing poker because they know that many German companies want to prevent an unregulated Brexit at all costs. I can only hope that the politicians of the other countries will not allow this and the EU will not be ripped off.”
- “Yes, dear BMW AG, then the Mini will be built in Germany. And the Rolls in Dingolfing. Design can stay in the UK.”
- “In plain language: give the British everything and make it possible without consideration. At least that’s how I understand the demands of the auto industry. Well, I would say:” Your own fault “. The auto industry has had years to adjust to it. It has not been done. You knew what was coming and you pretended that everything was okay. Now the big howling begins. Well, they haven’t noticed yet that they are about to die out with their range of vehicles. VW alone: delivers an e-car that has more defects than the TÜV can put on its list. Says everything. They are up to their necks. “
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