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Report: Brexit consequences as bad as feared
Brexit has resulted in higher costs. Photo: Stefan Rousseau/PA Wire/dpa
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As of January 2021, the UK is no longer a member of the EU Customs Union and Single Market. The government has not achieved its Brexit goals. A report also suggests frightening tendencies.
In view of the Russian war against Ukraine, German business representatives are calling for the Brexit treaty to be renegotiated.
“The goal should be an even more integrated Europe, including Great Britain, for both economic and security reasons,” said Andreas Glunz, the divisional director of the auditing firm KPMG. “Therefore, a renegotiation of the trade agreement between the EU and the United Kingdom must now be on the table and not just a transatlantic trade agreement “TTIP 2.0″,” said Glunz with a view to efforts to reach a contract with the USA.
Consequences of Brexit
One reason for the demands is the enormous consequences of Brexit. The British exit from the EU has significantly damaged bilateral economic relations, as a recent report by KPMG and the British Chamber of Commerce in Germany (BCCG) shows. “In 2021, Brexit – as feared – led to significantly higher costs for administration, logistics, customs, financing and IT adjustments while at the same time falling sales,” write Glunz and BCCG President Michael Schmidt in the paper published by the German press -Agency was available in advance.
As of January 1, 2021, the UK is no longer a member of the EU Customs Union and Single Market. A last-minute agreement still ensures largely duty-free trade. Nevertheless, trade barriers have arisen, the bureaucracy is great.
The numbers are sobering
The volume of German-British foreign trade fell below 100 billion euros for the first time in 2021, and German exports to Great Britain have fallen by 27 percent since 2015. In contrast, global exports increased by 15 percent. Only 69 companies took part in the BCCG and KPMG survey on the German-British Business Outlook, which was conducted before the Russian attack. Nevertheless, trends can be discerned.
The British market is becoming less important. Fewer and fewer companies generate between 20 and 50 percent of their global trading volume in Great Britain. In addition, more than half of the companies surveyed expect that the British economy will have shrunk in five years – for the EU and Germany, on the other hand, only a tenth expects this.
“This shows how badly Brexit has damaged the British reputation in business,” commented foreign trade expert Marc Lehnfeld from the federal company Germany Trade and Invest (GTAI). Indeed, trade barriers slowed down and made the exchange of goods more expensive. The British economy is growing more slowly because of Brexit, but Lehnfeld does not expect it to contract. There are still sales opportunities, for example in hydrogen and offshore projects or in gigafactory projects in the automotive industry.
But it is also clear that the Brexit goals, with which the conservative government has applied for leaving the EU, have by no means been achieved, as KPMG divisional director Glunz notes. These include greater autonomy, less administration, lower taxes and better bilateral trade agreements. “The UK should also have a keen interest in renegotiating a real trade deal with its still largest trading partner, the EU,” he said. According to experts, a change in the current British government position is not in sight. On the contrary: in the dispute over Brexit rules for Northern Ireland, the fronts between London and Brussels are currently hardening.