Brexit dubbed ‘economic disaster’ for British-German trade
Brexit has been an “economic disaster” for trade ties between the UK and Germany, Volker Treier, the head of foreign trade at the German Chamber of Industry and Commerce (DIHK), told Reuters on Thursday.
According to the economist, London’s decision to exit the EU and its single market has led to a decline in German direct investment and has jeopardized the UK’s status as a key trading partner.
“Brexit is an economic disaster for both sides of the channel… The UK’s exit from the EU has made our close trade relations more difficult and there is still considerable planning and legal uncertainty in the UK business of German companies,” Treier said, adding that the volume of German direct investment in the UK dropped by 16.1% in 2021 against 2016, the year of the Brexit referendum.
He noted that in 2022, Germany exported €73.8 billion ($80.57 billion) worth of goods to the UK, a 14.1% drop against the 2016 figures. At the time, Britain was Germany’s third largest export market, but has since plunged to eighth place. In terms of combined exports and imports, the UK slid from fifth place in 2016 to 11th in 2022, Treier added.
According to DIHK data, 2,163 German companies are currently operating in the UK, a 5.2% decrease from 2016.
According to Germany Trade and Invest (GTAI), an agency that helps foreign firms set up business in the country, over 1,000 UK businesses have settled in Germany since the Brexit vote. GTAI managing director Robert Hermann explained that British entrepreneurs want to have the opportunity to continue doing business with the bloc’s member states despite the UK’s exit, and Germany’s size and location are an advantage in this regard.
“We expect inquiries from the UK to remain at a high level… It is important for British companies to have a foothold in the EU,” Hermann stated. According to him, British businessmen launched 170 new ventures in Germany in 2022, surpassed only by firms from the US and Switzerland.
The UK voted to exit the EU on June 23, 2016. In early 2021, the country also left the bloc’s single market. The British economy has stagnated amid the Brexit-induced redrawing of trading rules. According to the UK’s Office for Budget Responsibility (OBR), Brexit was directly responsible for a 15% downturn in Britain’s ‘trade intensity’ – a term used to describe a country’s access to the global economy.
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