Brexit negotiations are continuing with both the United Kingdom and the European Union racing to bridge their differences over tough issues. But what happens if they fail to resolve their disagreements?
The result would be a so-called “hard Brexit”, meaning it would be chaotic and sudden. It would spell disaster for tens of thousands of workers and companies on both sides.
As reported by Deutsche Welle (DW) Germany’s international broadcaster, a report published by the Cologne-based German Economic Institute (IW) on October 9 paints a bleak picture. It says tariffs amounting to over €15bn could be levied in the event of a hard Brexit. That’s in the short-run. In the long-run, UK-EU trade could be reduced by up to 50 percent.
The study also pointed out that the German and British automotive industries would be affected particularly hard. “One-fifth of all tariff revenues collected by the UK would be paid by the German automotive industry; the British automotive industry would have to pay one-third of all duties collected by the EU,” it projected.
The automotive sector employs some 800,000 people in Germany and is the country’s biggest exporter.
About 5% of Germany’s GDP depends either directly or indirectly on trade with Britain, IW said, making it the third biggest trading partner for German firms. “That could dramatically change in the foreseeable future,” the IW study said.
Meanwhile, the Federation of German Industry (BDI), one of Germany’s most influential lobby groups, said on October 9 that a breakthrough in Brexit talks was needed at the EU summit on October 17-18.
“Otherwise there is the risk that Europe slides into a disorderly Brexit and that would cause a huge crisis,” BDI Managing Director Joachim Lang warned.