German Think Tank: EU Should Offer UK Brexit Concessions To Protect Economy

Advertisment

A German think tank said that the European Union should offer the UK concessions in the Brexit talks in order to avoid suffering damages in its economy.

The head of the IFO Institute, Gabriel Felbermayr, said: “Businesses are suffering already.”

He said that the exports of Germany to the United Kingdom had dropped by approximately 10 per cent in real terms since the 2016 Brexit referendum. It predicted that the GDP of German potentially be 0.2 to 0.5 percent lower in the long term due to Brexit.

He stated: “The uncertainty around this whole process is costing [German business] dearly.”

He added: “The big concern is how to get rid of this enormous uncertainty that has been weighing on economic activity for two years now.”

Felbermayr said that the European Union should soften its hard line to help in mitigating the possible economic disruption caused by Brexit.

In an interview with the BBBC, he stated: “The EU should, as a quick fix at least, offer to remove both the backstop and the withdrawal agreement’s current time limit on the mobility of goods and capital so that the provisional agreement would keep the EU and the UK in a joint customs territory association even after 2020 without making a difference between Northern Ireland and the UK. That would be key.”

Last January, the head of the influential business federation of Germany warned that a no-deal Brexit could leave German companies “staring into the abyss.”

The president of the BDI, Dieter Kempf, stated: “We are moving dangerously close to a chaotic Brexit”.

The BDI had projected economic growth in Germany for this year of 1.5 per cent. However, it said that it could be significantly lower in the event of a no-deal Brexit.

He stated: “If there is a massive disruption in trade between the UK and the EU we assume that growth will be lower.”