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Brexit could be an economic disaster for investment and trade ties between Germany and the United Kingdom. German analysts warned on 22nd June that Germany could now be facing a decline in UK trading partnerships and direct investment importance. In general, the country voted to exit the European Union on 23rd June 2016, leaving the EU market by early 2021.
But the move might have been an economic disaster for the two countries. DIHK (German Chamber of Industry & Commerce) head of foreign trade warned that the deal caused the recent challenges in the two nations’ trade. Nonetheless, Britain’s ministers disagree with this damning assessment. The ministers insist that the Brexit deal has not resulted in any economic harm to the UK.
Yet, the truth is that Germany exported 14.1% less in 2016 than 2022. The country exported goods worth 73.8 billion euros. In any case, Britain was the third top export market in Germany by the referendum year, but it slipped to the eighth position in 2022. The country also lost its spot as a leading trading partner in an assessment that combines imports and exports.
Analysts say the UK has lost its trading importance since the start of Brexit from fifth place to eleventh position. For that reason, the German direct investment volume in Britain also dropped. The UK recorded a 16.1% decline by 2021 from 2016, about 140 billion euros. The DIHK also clarified that the economy recorded a 5.2% decline in German companies to 2,163 from 2016 to 2023. Meanwhile, many UK companies have set up German over the past years.
Germany records new international firms that set up businesses through the GTAI (Germany Trade & Invest). It has registered over 1,000 new UK firms. The UK is ranked with other top trading countries like Switzerland and the US in setting up businesses in Germany. For instance, the UK set up 170 new companies last year alone. The GTAI managing director Robert Hermann says they expected UK Company setting up inquiries to remain high.
Robert believes the UK could reconsider setting up its foothold in the European Union. Overall, Germany’s central location and size are advantageous to UK firms. Above all, analysts conclude that Britain’s exit from the European Union makes its trade relationship with Germany more challenging. The worst part is the legal and planning uncertainties among Britain’s firms in Germany.