Brexit: Economy warns of impending catastrophe – billions in losses threaten

by

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”.

Loss of “up to 110 billion euros by 2025” in the event of a hard Brexit

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”.

Surf tip: Even Italy is growing faster – Brexit is weighing on the economy – and Johnson wants to make things worse

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. Accordingly, 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.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.