Business communities in the European Union and Germany are getting increasingly concerned that Brexit negotiations between the EU and Britain could fail and seriously damage trade.
Following a week in which London and Brussels accused each other of posturing and hardened their positions on the divorce deal, business leaders called for restraint.
Emma Marcegaglia, president of the Business Europe lobby group, said both sides needed to engage in an open and friendly dialogue to achieve the best result possible. “We expect a constructive and solution-oriented approach on both sides,” she told Handelsblatt.
And the German Chamber of Commerce and Industry, or DIHK, warned of the enormous costs that an unorderly Brexit would cause. There would also be a major bureaucratic burden and long waiting times caused by border controls, said president Eric Schweitzer. “As Great Britain is the third-largest export market for German companies, it’s clear that companies will see major additional costs as well,” he added.
“Some people are living under the illusion that Brexit will not have substantial consequences for their lives.”
With negotiations set to begin in June at the earliest, tensions between London and Brussels are escalating as they stake out their positions. EU chief negotiator Michel Barnier on Wednesday warned that Britain’s decision to leave the bloc would carry consequences. London has financial obligations to the EU that are “incontestable,” he said.
Mr. Barnier’s warning comes after the Financial Times reported that EU could slap Britain with a bill of up to €100 billion, much higher than expected, to settle outstanding financial obligations to the bloc. Mr. Barnier declined to give an estimate of Britain’s obligations, but the UK’s Brexit minister, David Davis, has flatly rejected the €100 billion figure. Some politicians in Britain say it has no legally binding costs to pay.
With London and Brussels at loggerheads, the business community sees a growing risk that the talks could fail. This would trigger a so-called hard Brexit in which the United Kingdom leaves the EU single market for goods and services without an alternative trade treaty in place.
Trade between Britain and the European Union would revert to World Trade Organiozation rules, which would prove costly for both sides. Mr. Schweitzer warned that customs duties would cost the British economy €12 billion.
Another sticking point is on the timing of negotiations. The British, who hold an election on June 8, do not want to talk about payments until the start of Brexit negotiations after the vote, but do want to begin talks on a trade deal. The EU says that’s not possible. The bloc agreed at the weekend that only when the treaty for withdrawal, including the rules governing financial matters, is ready will it open discussions about a free-trade agreement.
“Some people are living under the illusion that Brexit will not have substantial consequences for their lives, and that the negotiations could be brought to a close quickly and painlessly. That is not the case,” said Mr. Barnier.
Ruth Berschens heads Handelsblatt’s Brussels office, leading coverage of European policy. Till Hoppe reports on politics for Handelsblatt. To contact the authors: firstname.lastname@example.org, email@example.com