January 22, 2021

The German industry prevents against the «Brexastre»

The German industry prevents against the «Brexastre»


Rosalía SánchezRosalía Sánchez
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Correspondent in BerlinUpdated:

March is just around the corner and negotiations for the Brexit continue to take a step forward and two behind. In Berlin a possible scenario is already considered a Brexit without agreement and that possibility «Would bring German industry to a disaster», has warned the president of the industrial federation BDI, Joachim Lang, giving rise to the new quoting.

Horrible costs due to additional tariffs, difficulties for thousands of companies and a fall in exports appear in the scenario that Lang has presented this morning at a press conference in which he has asked the government, "on behalf of the German economy, a negotiating effort that avoids the serious crisis in which the German industry would fall in case of a Brexit without agreement ». "Hundreds of thousands of workers on both sides of the Canal would be left unemployed," Lang predicted, "the summit that will take place in two weeks time must make progress, otherwise Europe would fall prey to a messy Brexit and the result would be a crisis".

Lang has based these auguries on a study of the German Economic Institute (IW) according to which the German industry should face additional tariffs worth 3,000 million euros per year. The most affected sector will be the automobile, which would suffer 60% of the set of additional costs. According to Lang, the most logical thing is for the industry to react by raising the prices of the products and generating changes in the flows of goods and services.

German exports to the United Kingdom, always according to the estimates of the IW, they would be reduced by 4.3%. The EU for its part would also set tariffs of an average of 2.8% on British imports and trade could be reduced to 50%. German exports to that country, outside the EU, would decrease by 57%. "East horror scenario should drive a more constructive negotiations policy, "says IW economist Markos Jung in support of Lang," we are playing around 5% of German GDP. "

"Time is short"

The Berlin government, however, and surely adjusting to a negotiation strategy still in progress, shows quite indolence to these complaints and figures. Merkel's team insists that it is London who has to clarify what is the project of relationship with the EU after leaving the group, so that it can check the concept and issue an opinion. «It is a friendly country, with whom we want a good relationship and who, in our opinion, has made a bad decision. It is not our role to say to whom they want to separate from us how they should organize things intelligently, "said a member of Angela Merkel's closest team today.

"Time is short," German government spokesman Steffen Seibert recently warned. «An abandonment of the United Kingdom without an agreement it does not respond to British or European interests, so the goal is to reach maximum progress until the European summit in mid-October. "

From the German State, everything is said, do not handle such apocalyptic forecasts. At least in public. Merkel continues to reject firmly Merkel rejects the proposal of May to accede without restrictions to the internal market of goods from outside the block. «One can not belong to the single market, if he only wants to belong to one part of the single market and not to the other three, "insisted the German chancellor, who acknowledges that" we have months of hard work ahead ".

The head of the financial agency, Tammo Diemer, acknowledges that "we have the impression that we are already working on the hypothesis of a hard Brexit and market agents based in London have it assumed as a possibility, so that from the banks as well as from the companies that negotiate with values, we perceive that they are prepared to continue functioning fully in that scenario. We expect significantly higher interest rates and a higher return on German bonds. "

The European Banking Authority (EBA), however, considers that the banking sector is not as prepared as it should be and urges financial institutions to accelerate the preparations and assume contingency costs because, he warns, "there will be no solutions of a public nature" . Its president, Andrea Enría, has insisted that «There is no legal certainty» about a supposed period of transition "and points out that March 29 can be the definitive time limit. «The entities can not take for granted that they will be able to continue operating as they are today nor can they trust a political agreement yet to be finalized », he said, pointing out the need for each company to identify its risk channels related to Brexit and to act before that date.

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