Trade Risks

Beware the Ides of Brexit

  • Why it matters

    Why it matters

    If Britain opts for a rapid, “hard” Brexit from the European Union, it could have greater-than-expected negative consequences for some German companies, according to a new study.

  • Facts


    • German firms are underestimating the risks to their balance sheets from a hard “Brexit,” according to a new study by Deloitte.
    • The German logistics and transport industry is the largest German employer in Britain, with roughly 96,000 workers.
    • BMW is one of Germany’s largest corporate employers in Britain, and its Mini car line is still based on the island. Eight in 10 cars BMW makes in Britain are exported off the island.
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Britain Prepares For Brexit Deadline
German companies are underestimating the risks to their balance sheets from Brexit, according to a new study by Deloitte. Source: Bloomberg / Luke MacGregor

Almost every day in Britain, the consequences of the country’s approaching Brexit from the European Union are discussed publicly within business, government and social circles. Experts fear the costs to British industry could run into the billions of euros. But German businesses also have a lot to lose from a “hard Brexit,” the sudden withdrawal of Britain from the European common market, according to a new survey by Deloitte.

“The British market is the second-largest market in the European Union — no business that exports can afford to ignore Brexit,” said Alexander Börsch, the chief economist and head of research at Deloitte, in an interview with Handelsblatt. In recent years, the growth rates of German exports to Britain have risen dramatically, which is only raising the stakes for German firms. Despite the potential costs, many German companies are taking a dangerous wait-and-see attitude toward Britain’s departure from the E.U.

To be sure, the subject of Brexit is high on the agendas of many German exporters — but other companies in Europe’s largest economy should be paying more attention. “The more the negotiations proceed, the more visible the consequences of Brexit will become. Then the bargaining pressure will increase,” Mr. Börsch said.

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