Friday, 8 July 2016

DIHK survey: Brexit will damage German economy

I’ve just been looking at some interesting results from a survey of over 5,600 German companies conducted by the Association of German Chambers (DIHK) at the end of June 2016. The results are only available in German but here are the main points:

German-British trade

27% of those questioned expect their exports to the UK to decrease during the Brexit negotiations. And long-term, around half expect exports to drop. German companies see the biggest risks to trade with Britain as the increasing number of tariff and non-tariff barriers, political uncertainty and the declining value of the pound.

Based on these results, continued uncertainty and the decreasing value of Sterling, the DIHK have revised their forecasts for export growth to -1.0% for 2016 and -5.0% for 2017 (so a decline). As a comparison, 2014 saw export growth of 11.1% and 2015 12.8%

German companies in the UK

Although the majority of German companies with a presence in the UK see no change in their circumstances and market development, over a third are considering a decrease in investment and about a quarter are looking at reducing headcount. The overwhelming majority (over 90%) predict no such adjustments for their German operations.

British companies in Germany

Interestingly, 21% of British companies in Germany who responded to the survey are looking at increasing their investment in Germany and employing more people. A clear sign of the move to a UK/EU entity configuration within corporate groups to help minimise the volatility of Brexit and ensure future access to the single market.