United Kingdom and Gibraltar European Union membership referendum
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An unregulated Brexit at the end of October would be less serious for Germany than a new shift from the point of view of the German Institute for Economic Research (DIW). The expected costs for the Federal Republic are medium to long term rather low, German consumers hardly affected and chaos avoidable, said DIW CEO Marcel Fratzscher the news agency dpa.
"What I now see as risks is uncertainty," said Fratzscher. "Better an end with horror than a horror without end - rather a hard Brexit now than a hangover that will last another year or two."
German exports to Great Britain and Ireland have already weakened due to the uncertainty. "Once clarity is there and companies know what to look for, you can handle it," added the DIW President.
German companies are already orienting themselves
Many economic researchers warn against a UK exit from the EU without a contract, especially since Germany in 2018 still exported goods worth 82 billion euros to Great Britain. A study by the Bertelsmann Foundation assumes that a no-deal would result in income losses of almost € 100 billion a year, of which € 57 billion in the UK and just over € 9.5 billion in Germany.
imago / IPON
DIW boss Marcel Fratzscher
"It is still beneficial to all sides if the 'Hard Brexit' is averted," study author Dominic Ponattu said. "More time to negotiate an agreement would definitely be worth it."
But Fratzscher argues against it. With regard to German consumers, he said: "If you take consumers now, I'm having trouble seeing who's most affected, and what we import from the UK is limited to consumer goods."
German companies are already reorienting themselves - both for the purchase of primary products and for new sales markets. According to World Trade Organization rules, Brexit without a contract would incur only a small tariff of an average of one to two percent on British goods. Long waiting times because of necessary border controls as well as delivery bottlenecks could be prevented.
"No other country wants to have chaos like the British"
"It does not have to be this chaos, and it's ultimately not in the interest of the EU or the UK," said Fratzscher. "The argument that we have to make an example of Great Britain and not just make it attractive, we have a long time behind us, I believe, no other country wants to have such a mess as Britain has seen in the last three years."
Unlike Germany, the United Kingdom and Ireland also have to adjust to considerable negative consequences from Fratzscher's point of view. And given that there would be no transitional period without an agreement, London would be under great pressure to unite with the EU.
"I do not think Britain would have a better bargaining position after a hard Brexit, but on the contrary, the pressure on Britain to negotiate a free trade agreement with the EU as soon as possible would be greater than smaller," said Fratzscher.
