News

Brexit and Germany – two months on

Before the historic vote to leave the European Union, the noises coming from the German government about smooth, continued British access to the Single Market weren’t encouraging.

Wolfgang Schäuble, Germany’s finance minister, ruled out a Swiss or Norwegian style model of access for the UK. “That wouldn’t work… It would require the country to abide by the rules of a club from which it currently wants to withdraw… In is in. Out is out”, he told Der Spiegel two weeks before the referendum.

Two months after the vote, has the landscape changed for German companies wishing to sell and/or expand into the UK?

A few weeks after the British people made their decision, both governments were making positive statements in public and in private. Even in these very early days, there’s a lot of comfort that German companies can take from these discussions if they have been planning expansion into the UK.

Speaking on 16th August, Michael Roth, the German minister of state, said that the UK could achieve a “special status” as long as it started negotiations on withdrawal at the beginning of 2017.

Germany has its own general election next year. How Brexit is handled is an important issue for many Germans as many of their companies rely on the British export market for turnover and profit.

On 25th August, the IFO Economic Institute’s monthly survey of 7,000 German companies recorded a fall to its lowest level since the Eurozone debt crisis in 2012. Klaus Wohlrabe, IFO economist, told Euronews that the “worst hit … companies … have a close trading relationship with the United Kingdom, like the chemicals industry and automobile sector.”

This pessimistic report came a week after Opel cut working hours at its German plants because of fears of falling UK export sales.

The odd outlying statement aside, most economists and analysts expect German politicians to do everything to ensure its companies have access to British markets and to signal that intention to voters and the markets.

From a British perspective, Theresa May, the new prime minister, wants to protect and support British financial services firms’ “passport” into the EU. Britain has appointed a team of three Brexit-supporting ministers to negotiate favourable trade deals with the EU and the rest of the world. Germany is an important trading and defence partner to the UK via its NATO membership.

Two months on, despite the change in Britain’s status with the EU, it seems that Britain and Germany will want business to continue on as usual.

Goodwille is a leading partner in helping overseas companies establish themselves in the United Kingdom. We help not only with the set-up but everything that you need to comply with governmental regulations – including legal, accounting, financial and outsourcing services. Please get in touch and ask about our experience in helping German companies find a foothold in the UK.