German companies and Brexit “A big disappointment”

Status: 16.06.2021 5:08 p.m.

New customs controls, more bureaucracy, additional costs: Brexit is causing many German companies to consider whether they can still maintain locations in Great Britain. By Aylin Dülger, tagesschau.de Little of what Heller makes stays in England. The company from Nürtingen near Stuttgart operates worldwide. The mechanical engineering company exports components that are installed in machines for milling engine and metal parts at the UK site of Redditch in the county of Worcestershire. From there they reach end customers in many different industries. Both export and import are part of day-to-day business. Brexit will put this business to the test. “For a long time we clung to the illusion that in the end a solution based on partnership would emerge,” says Heller boss Klaus Winkler. Instead, the Brexit agreements created a very bureaucratic construct.

05/31/2021

The truck takes eight days instead of three

Like many of the small and medium-sized companies that form the backbone of the export-oriented German economy, Heller is now struggling with additional customs controls and bureaucracy. “We have a completely different form war,” says Winkler. “A truck that we send from Nürtingen to England now takes between eight and ten days. We used to do it in three days.”

Klaus Winkler, Head of the Heller Group: “Long indulged in an illusion” The Chamber of Commerce and Industry also moved in April British Chamber of Commerce in Germany a first sobering Brexit balance sheet . Two thirds of the companies surveyed assessed the effects of the new foreign trade rules with Great Britain more negatively than expected at the beginning of the year. More than three quarters of all respondents reported difficulties in moving goods. And almost every fifth company has therefore decided to completely stop foreign trade with the island.

05/12/2021

Fear of withdrawal

For Heller, completely forgoing foreign trade with Great Britain is a horror scenario that the company is trying to avert. Business has been slowed down enormously, said Winkler. “We had to convey to our colleagues in Great Britain in a credible manner that we do not intend to question the location in Redditch, but rather to preserve it if it can somehow be done.” In order not to jeopardize its competitiveness, the special machine manufacturer will have to constantly reassess the situation in the near future. Because if the products become too expensive, customers threaten to turn to competitors – the location could no longer be held.

04/28/2021

Smaller companies more affected

Smaller companies in particular suffered from the additional administrative effort, according to Ulrich Hoppe, head of the German-British Chamber of Commerce and Industry (AHK) in London. That makes it no longer economically viable for many to serve the British market. “The medium-sized and large companies that are active in the United Kingdom are of course also struggling with the additional effort, but they can cushion it much better,” explains Hoppe. Despite the additional costs, the British market will remain very important due to its strategic importance. In 2020, Germany exported goods worth 66.85 billion euros to Great Britain. That was around 5.5 percent of total exports. This made the United Kingdom the fifth most important export market for the Federal Republic of Germany. So that German companies do not leave the island in the future, Heller boss Winkler would like to make goods traffic easier . He is hoping for less bureaucracy on the part of the English authorities, so that the additional effort can be reduced to a more bearable level. For the time being, however, disillusionment dominates. Even if Heller wants to stick to its British location: “Overall, Brexit is a big disappointment for us.”

European market China is significantly reducing investments

Status: 16.06.2021 12:53 p.m.

China invested less in the European market in 2020 than it has for ten years. Great Britain was particularly hard hit. It’s not just the corona pandemic to blame. China significantly reduced its direct investment in the European market last year. According to a joint report by the American Rhodium Group and Merics in Berlin, direct investments by the People’s Republic in the EU and Great Britain amounted to around 6.5 billion euros in 2020. Compared to the previous year, a decrease of 45 percent. That is the lowest level in ten years.

June 16, 2021

Great minus for Great Britain

In the past year, even 77 percent less Chinese direct investment flowed into Great Britain. Even so, the UK remains one of the top three destinations for China’s investments in Europe – alongside France and Germany at the top. The three most important areas for Chinese investors were infrastructure, information and communication technology and electronics. Poland, promoted by a major acquisition, was a major new recipient last year.

01/14/2021

Stricter controls on Chinese purchases

However, many Chinese purchases are now being scrutinized more closely by the EU member states than in the past. Several planned takeovers did not materialize. In Germany, for example, the Federal Ministry of Economics stopped the planned sale of the radar specialist IMST from North Rhine-Westphalia to a Chinese company with links to the military. Several EU countries, including Italy, France, Poland and Hungary, had tightened their inspection mechanisms for direct investments from third countries last year. Investments continued to decline in the current year, according to the report. The reasons are the pandemic, high hurdles for capital outflows from China and tighter controls in the EU.

10/01/2019

Sanctions dispute exacerbates tensions

In addition, the tense relations between China and the EU are likely to play a role. That’s the way it is Investment protection agreements agreed in December between the EU and the People’s Republic is currently on hold and ratification by the European Parliament seems to be moving further and further into the distance. Another point of contention remains the human rights violations in China: In March, the EU Sanctions imposed on Chinese politicians and an organization for the first time in 30 years . The EU accuses China of violating human rights by suppressing the Uyghur Muslim minority in the Xinjiang region. As a result of the European punitive measures, China also reacted shortly thereafter with sanctions against European institutions and several EU politicians . With information from Ruth Kirchner, ARD Studio Beijing, currently Berlin

After Brexit Great Britain and Australia sign trade pact

Status: 15.06.2021 12:07 p.m. Great Britain and Australia have agreed on a free trade agreement. The deal will ensure further growth, announced the government in London. But there are also skeptical voices. For the first time since Brexit, Great Britain has signed a completely renegotiated trade agreement. Prime Minister Boris Johnson reached a free trade agreement with his Australian colleague Scott Morrison. The heads of government have cleared the last stumbling blocks out of the way in the past few days, said both sides.

Boost for 3.5 million employees?

Accordingly, manufacturers of cars and whiskey would benefit from duty-free, the government announced in London. Young Britons under 35 should be given more freedom to live and work in Australia. Industries with around 3.5 million employees in the UK received a boost. The contract will ensure further growth. “Today marks a new dawn in the UK’s relationship with Australia, one that is fueled by our shared history and values,” said Johnson. Australian Trade Minister Dan Tehan described the deal as a “gain for jobs, businesses, free trade”.

Exemption from duty for whiskey, among other things Image: dpa

“Good news for both countries”

In 2020, UK-Australian trade was worth £ 13.9 billion – around € 16.15 billion. The UK is Australia’s fifth largest trading partner. Before the British became part of the EU and with it the internal market in 1973, Australia was even the most important trading partner. Economist Gabriele Suder from RMIT University in Melbourne welcomed the British-Australian deal. This is good news for both countries. After all, it is the first agreement in the post-Brexit era. She expects the deal to bring the Australian economy 1.3 billion Australian dollars (around 830 million euros) annually. Other experts believe the pact will be more important to Britain. Australia has a strong trade focus on Asia.

analysis 04/27/2021

04/28/2021

British farmers fear imports

However, the pact with Australia is controversial in Great Britain. Farmers fear a flood of imports of lamb and beef as soon as customs duties cease to exist. This could affect British sheep and cattle farmers. The government in London stressed that the deal included ceilings on duty-free imports over the next 15 years, as well as quotas and other safeguards. Farmers’ associations called on parliament to closely monitor the contract. According to Australian data, the country’s farmers will benefit from the agreement.

Treaties with dozens of states

Great Britain is currently repositioning itself after Brexit. Since the UK left the EU, it has signed trade deals with dozens of countries. However, these were always copies of the pre-Brexit EU treaties with these states.

report March 29, 2021

Economic recovery Is Germany’s upswing lagging behind?

Status: 11.06.2021 6:09 p.m.

The corona numbers are falling, economic life is normalizing and the economy is picking up again. Germany seems to be lagging behind its neighbors. Is it really like that? From Lothar Gries, tagesschau.de The British economy grew by 27.6 percent in April compared to the same month last year – a record as the National Statistics Office (ONS) announced. The strong growth figures reflect the economic recovery in the wake of the gradual opening of the economy, which crashed in spring 2020 after the start of the pandemic and the following protective measures. Projected over the year, the British central bank now expects an increase in gross domestic product (GDP) of 7.25 percent. That would be the highest growth rate since 1941. Other European countries such as France are also assuming a strong economic recovery of 5.5 to 5.7 percent for the current year. The Spanish government even expects an increase of 6.5 percent. In fact, in the opinion of most economists, the prospects for economic growth in the euro area have brightened significantly in view of the falling number of corona infections and the global economic recovery. According to the latest information, the European Central Bank (ECB) is therefore assuming an increase in GDP in the euro area of ​​4.6 percent this year.

06/11/2021

Germany far behind in terms of growth

After a strong upward trend, things should go up in the USA, which is still the largest economy in the world. There, the Federal Reserve (Fed) is expecting an increase in economic output of 6.5 percent with a view to the advanced vaccination campaign and the prospect of an economic stimulus package. In China, Germany’s most important trading partner, the economy is likely to grow by as much as 8.5 percent this year. And Germany? Lies far behind in one of the farthest places. The Bundesbank currently expects GDP growth of 3.7 percent for 2021. Federal Minister of Economics Peter Altmaier is even more optimistic. “Thanks to extensive government aid of almost 300 billion euros, the German economy survived the worst of the coronavirus crisis. This year, growth of three and a half to four percent would be possible,” said the minister.

05/12/2021

So is the recovery of the domestic economy lagging behind that of its most important trading partners? The economists of the Organization for Economic Cooperation and Development (OECD) give a differentiated answer. It is true that the economy in countries that quickly vaccinate their population against Covid-19 and that contain the infection rate through effective measures is recovering faster than elsewhere.

Already in the summer pre-crisis level

In South Korea and the United States, for example, per capita income is likely to have reached pre-pandemic levels by the end of this month. In large parts of Europe, however, this will only be the case after three years, in Mexico and South Africa it may take five years or more, the OECD fears. Seen in this way, Germany is in a much better position than when looking at the bare growth figures. The Bundesbank estimates that economic output could reach pre-crisis levels again this summer. The economists of the OECD expect that this will not be the case until the end of the year.

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Nevertheless, the recovery in Germany would still be faster than in Italy, France or Spain. In these countries, GDP per capita is unlikely to be above the level of the end of 2019 until the middle of next year, according to the forecast of the OECD. It looks particularly bleak for Spain, whose economy will not be above pre-crisis levels again until the summer of 2023. The experts predict that Great Britain will not return to pre-crisis levels until the middle of next year.

Fatal dependence on tourism

This shows the great dependence of these states on the service sector and especially on tourism. In Spain, for example, this industry slumped by 48.4 percent last year, in Italy by 35.1 percent, in Greece even by 55.4 percent, while in Germany it fell by almost 15 percent. Accordingly, GDP fell less sharply in Germany last year than in most of the neighboring countries. This is also due to the comparatively higher share of industry in the overall economy and its unchanged strong exports to China. “How strong the economic recovery will be in each country depends on the level of government support for businesses and vulnerable workers, the degree of dependence on certain industries such as tourism, and health and vaccination policies,” said a May report Study by the OECD. Despite the global economic recovery, global income is likely to be around three trillion dollars lower than before the pandemic by the end of 2022, the OECD estimates. This roughly corresponds to the performance of the French economy.

From Constantin Röse, ARD stock exchange studio Five years: That’s how long EU and British diplomats have been fighting for Brexit. With the Vote in the European Parliament the agreement is now closed – but with a clear warning from Commission President Ursula von der Leyen that this agreement has “teeth”. That sounds more like a threat than restarting relationships.

Northern Ireland contentious issue

So is the ongoing EU-UK dispute going on? No, says Jörg Krämer, Commerzbank’s chief economist: “We’ve seen the big brawl a long time ago. But there are still open issues.” For example the situation in Northern Ireland: The EU complains about violations of the UK against the exit agreement. This actually guarantees open borders between the British province and the EU member Ireland. However, the UK doesn’t like this. However, Krämer considers it unlikely that the EU will react to this with punitive tariffs. “I do not believe that this conflict will escalate to such an extent that the European Union will introduce tariffs on the movement of goods,” says the economist, because: “The European Union would cut its own flesh.” If you look at the total exports of the EU to Great Britain, they did not decrease in January.

Bureaucratic hurdles deter companies

The picture is very different in the case of German-British trade relations. German exports to Great Britain collapsed by 30 percent in January compared to the previous year. The mood in German companies is correspondingly bad. Customs formalities in particular are a thorn in their side for companies that want to export goods to the island, explains Carsten Brzeski, chief economist at ING Bank. “You were in part surprised by all these bureaucratic hurdles that have now been built up by the fact that Great Britain is no longer a member of the European internal market.” This leads to higher costs and more bureaucracy, according to Brzeski, and that scares some companies off. According to a survey by the British Chamber for Commerce in Germany and the consulting firm KPMG, 17 percent decided to stop foreign trade with Great Britain completely because it is no longer worthwhile for them.

Still many questions unanswered

In this divorce, however, it also becomes clear that many issues are still unresolved: What is the future of deep-sea fishing? Or how do the EU and Great Britain deal with financial services? Economist Brzeski does not yet believe in a quick relaxation between the mainland and the island. “In the coming months – probably also in the course of this entire year and also next year – we will see the negative consequences of Brexit rather than being able to talk about new opportunities here.” If anyone sees opportunities, it is the Brexit hardliners. You like to refer to the strong economic forecasts. According to this, economic growth in Great Britain is expected to be around six percent this year, in Germany, for example, only around 3.5 percent. The British economy owes this primarily to the vaccination success in the country – and by no means to Brexit. You will only really be able to see the consequences of this after the pandemic.