The Brexit Free Trade Agreement between the European Union and the United Kingdom has been in effect since the beginning of this year. The early medieval balance of LBBW research shows: the German economy is well prepared to lose the importance of Great Britain.
Although the corona epidemic is currently obscuring the effects of Brexit, the UK economy in particular is being hit by Brexit, with authors Frank Pillar, Per-Ola Helgren, Stephen Michel and Katza Mல்லller in their study “Brexit – the deal is over, what now? ”: In January 2021, British GDP contracted by 3 per cent compared to the previous month, while exports to the EU fell by 40.7 per cent in the first month of this year.
According to the current estimates of the EU Commission, the British withdrawal will account for just 0.5 per cent of the EU’s GDP by the end of 2022. In the United Kingdom, on the other hand, economic power is declining by 2.25 percent.
Nearly half of UK exports went to the EU in 2019
In 2019, the UK exported $ 170 billion (GBP) worth of goods to the European Union. It accounts for 46 per cent of UK exports. In contrast, the UK received 53 per cent of its imports from the European Union. Its value is 0 270 billion.
The British exit from the EU is now creating new tariffs on trade, thus creating a major drag. This makes the trade of goods more complicated – primarily for British exporters, as determined by the authors of the study. For example, British exporters must prove when importing goods that they meet EU standards and that they actually come from the UK. I.e. a significant amount of extra work.
The UK is important to the German economy
Since the Brexit referendum in 2016, many European companies have suspended import-export trade with the United Kingdom. As for Germany, Brexit has been losing prominence since the UK as a trading partner.
“Measured against total German exports, supply to Great Britain was less than 6 per cent in 2019. Companies from Baden-W்டrttemberg export even less to former EU member states. Here it is only 5.1 per cent. By comparison: the German economy will export 7.6 per cent of its products to France in 2020. Will export, ”says analyst Katja Mல்லller.
In contrast, Germany imported only 3.4 percent of its goods from its British neighbors by 2020. Overall, the effects of Brexit on the German and Baden-Wூrttemberg labor markets should be manageable. The biggest risks to Baden-Wர்டrttemberg exporters are additional tariffs and legal uncertainty, ”said analyst Guido Zimmerman.
Manufactured in the automotive industry and mechanical engineering
German companies are affected by Brexit to varying degrees depending on the industry. “For many export-oriented companies in Europe, the additional costs associated with a free trade agreement must be managed, especially as German industry has third country experience and the necessary infrastructure,” the authors suggest. The close coordination between the EU and the UK will be very helpful in furthering bureaucratic tariffs and regulations to keep economic and economic losses as low as possible.
Analyst Frank Pillar said that since 2016, the automotive industry has continued to adapt to more difficult trade and production conditions and less emphasis on the British market. For example, in the Stuttgart-based automobile manufacturer Daimler, the sales share of the United Kingdom has already fallen from 8.5 percent in 2016 to 5.8 percent in 2020.
One-fifth of all imported machinery is made in Germany
As far as mechanical engineering is concerned, reaching a contract is fundamentally positive. Stephen Michel explains that with the Free Trade Agreement, there will be no new tariffs on machines trading between the EU and Great Britain. As for the United Kingdom, Germany is the most important machine supplier. 21% of all machines imported to Great Britain are from Germany. In contrast, Germany gets most of its imported machinery from China – Great Britain plays a subsidiary role here.
The loneliness of Great Britain has had a relatively small impact on the logistics industry. However, even within the transport sector, British companies are the ones most affected, said judge analyst Per-Ola Helkren.
Small companies in particular were hit by new bureaucratic hurdles, while large companies like DHL, Kohne & Nagal or Schenger dealt with them relatively. The good news from air cargo is clouding the picture for the overall economy: looking at lower supplies, logistics companies have increased their cargo rates as a result of Brexit.