Fri, Jan 13, 2017 - Page 10 News List

German companies unfazed by potential Brexit impact: poll


When it comes to Brexit, German companies appear to be relaxed for now.

More than 90 percent of firms in a survey by the Cologne Institute for Economic Research do not see “strong effects” on them from the UK’s decision to leave the EU.

“They are relaxed because they don’t see a large impact on their business,” said Juergen Matthes, head of international economic research at the institute.

In the survey, released on Wednesday in Brussels, only 10 percent of the approximately 2,900 businesses polled said they expected a “serious decline” in exports to the UK due to Brexit.

“Strikingly, a quarter of German firms rather expect to benefit from diversion of business activities away from the UK,” it said.

Matthes said the results indicate that companies are “prepared” for the expected negative effects of Brexit, which include an impact of 0.8 percentage points on exports to Britain this year, according to the institute.

Reports showing record-low unemployment and improving business sentiment reinforce the view that the economy may be well placed to ride out many challenges.

A preliminary estimate from the Federal Statistics Office yesterday showed that the German economy expanded by 1.9 percent last year, the strongest rate in five years and an improvement on the previous year.

Economists polled by Reuters had expected growth of 1.8 percent after an expansion of 1.7 percent in the previous year.

The Cologne institute estimates that Brexit factors — in particular the weaker pound and lower forecasts for UK economic growth — would hurt Germany’s economy to the tune of one-quarter percentage points of GDP this year, an impact it termed “moderate.”

British Prime Minister Theresa May on Monday said that the UK would need a new trading relationship with the 27 other EU nations after its withdrawal.

A day later, British Foreign Secretary Boris Johnson said it would be the “height of insanity” to imperil investments in both Germany and Britain that underpin hundreds of thousands of jobs.

The survey indicates that German firms support Chancellor Angela Merkel’s firm focus on maintaining a united EU front against the UK, even if it risks curbing economic ties. Some advocates of Brexit have counted on Germany to push for compromises with the UK to support exports.

“The results of the survey call into question the view brought forward in the British public debate that strong political pressure from the German business community would ensure soft compromises to the benefit of the UK in the upcoming Brexit negotiations,” the Cologne-based research group said.

Additional reporting by Reuters

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