The Federation of German Industries (BDI) spoke out on Wednesday against renegotiating the agreement between the European Union (EU) and the United Kingdom (UK).
“The UK Prime Minister’s demand that the withdrawal agreement be reopened is irresponsible,” said BDI Director General Joachim Lang.
He said that the withdrawal agreement held “enormous importance for the German economy”.
German companies relied on “as little friction as possible in foreign trade, stable conditions at the external borders and security in matters relating to workers,” added Lang.
Lang emphasised that German industry supported the the government and European Commission in standing by the negotiated treaty, and urged Brussels and London to “set the right course in order to avert the threat of hard Brexit”.
Brexit has already been leaving its mark on UK-German trade for a while, according to Berthold Busch, senior economist for European Integration at the German Economic Institute.
The Institute found that while German exports of goods to the EU rose by more than 12 percent between 2015 and 2018, its exports to the UK fell by 7.8 percent.
The decline was particularly pronounced for motor vehicles and pharmaceutical products, which “suggests that the value chains in these particularly closely interwoven branches of industry are already being restructured at the expense of the United Kingdom,” Busch said.
The new UK government was conducting “irresponsible politics” by ignoring such negative developments and instead, UK policy continued to pursue its strategy of “whatever the cost,” said Busch.
Lang noted that during this “sensitive phase, the existing concerns in the economy should be exacerbated. Our companies now have no choice but to continue to prepare for a hard Brexit on Oct. 31.”
Only the European Commission could ensure that internal market rules would be respected at the Irish border in the long-term, which would require a backstop to avoid border posts between Northern Ireland, which is part of the UK, and the EU state of Ireland.
These comments were made as UK Prime Minister Boris Johnson is to meet German Chancellor Angela Merkel in Berlin on Wednesday evening.
Johnson had made a public commitment to lead Britain out of the EU on Oct. 31 with or without an agreement.
Meanwhile, British manufacturing output stabilized in the three months to August, according to figures published Tuesday by the Confederation of British Industry (CBI).
CBI’s monthly Industrial Trends Survey showed that 15 per cent of manufacturers reported total order books to be above normal, with 28 per cent being below normal, bring a balance of negative 13 per cent, less than the reading of negative 34 per cent in July.
Meanwhile, 11 per cent of firms revealed their export order books were above normal, compared with a 26 per cent being below normal, giving a balance of negative 15 per cent, also less than the number of negative 32 per cent in July.
In terms of stockpiles, 18 per cent of companies said their present stocks of finished goods were more than adequate, with only 4 per cent saying they were less than adequate, sending a balance of positive 14 per cent, slightly higher than the long run average of positive 13 per cent.
Anna Leach, deputy chief economist in CBI, said: “despite signs of stabilisation in the data this month, UK manufactures remain on the receiving end of a double whammy: the slowdown in the global economy and Brexit uncertainty. ”
“As we get closer to October, it’s crucial that the new prime minister secures a Brexit deal ahead of that deadline and gets on with pressing domestic priorities, from improving our infrastructure to fixing the apprenticeship levy,” Leach said.
Tom Crotty, chair of CBI Manufacturing Council, said: “relentless Brexit uncertainty has continued to be a millstone around the neck of manufacturing firms as we approach the end of the summer.”
Crotty said it was vital for government to lift the burden by ending the Brexit deadlock, adding that “only then can our manufacturers turn their full attention to long-standing issues affecting the sector, such as solving the skills challenge and improving productivity.”
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