A top German car executive announced that the German industry is preparing for a “worst case scenario” Brexit.
The head of the German Automotive Association, Matthias Wissmann, said that contingency plans were being created to deal with a possible failure of negotiations on Brexit in the next 18 months.
“We have a task force that considers what will happen in a worst case, but hope politicians avoid that worst case,” Wissman stated on the sidelines of the Frankfurt Motor Show.
The said worst case “hard Brexit” scenario if Britain becomes a “third country” in European Union law in March 2019, is assumed to comprise of the imposition of tariffs, and non-tariff barriers.
He suggested that the European Union and the British Government had to be “very careful not to destroy the value chain” of the car industry in Europe, and as Brexit negotiation time ticked down, options were running out.
“If you ask me what the best solution is, it’s clear – Britain should stay in the internal market, should stay in the customs union.
“Any other solution is very complicated and will need years to make it possible.”
When he was asked to explain why the United Kingdom should stay in a customs union that would limit the ability to enter new trade deals, Mr Wissmann noted that “Germany was the world’s top exporter and the car industry within it…all achieved within trade deals negotiated by the EU for the UK and Britain.”
“Do you really think that you will perform much better with your own trade agreements? I’m German if you ask: who is the most successful exporter in the world? It is Germany.
“If you ask which industry it is – it is the German auto industry.
“Doesn’t the EU with its 500 million (people) get the better results? That’s the open question.”
Mr Wissmann had limited time for the idea that his German car industry would approach Chancellor Angela Merkel and require a compromise in Brexit discussions on behalf of an industry which exports one in seven cars to the United Kingdom.
It is up to the (UK) Prime Minister to change her position, Wissman stated.
“Britain is very important for us, but the EU27 is even more important for us, as a market and as a political concept…So we do the utmost to support anyone who keeps Britain as close as possible to the EU.
“But if you ask me for priorities: Keeping the EU27 together is even more important than to keep Britain nearby, so let the British Government be convinced that they have to build a bridge.”
He added that a cliff edge Brexit would “change everything”, including German industrial investments in the United Kingdom.
“If we will fall down the cliff edge, it would be very critical for all sides, also damage part of our concepts in Britain and elsewhere, but to be clear, the higher price would be paid by the British.”