At first glance, the figures read well: German-British trade increased by 14.1 percent last year. But that was not enough to stop a historical development.
The economic importance of the United Kingdom for German foreign trade is steadily declining three years after Brexit. Because of the consequences of the exit from the EU and the poor situation of the British car industry, the country slipped out of the top ten of German trading partners for the first time in recent history.
This was the result of an analysis of data from the Federal Statistical Office by the federal company Germany Trade and Invest (GTAI). The evaluation is available from the German Press Agency in London. The experts had already expected this development in late autumn 2022.
The bilateral exchange of goods increased nominally by 14.1 percent compared to the previous year, to 111 million euros. However, German trade with the Czech Republic grew by 16.4 percent to 112.9 million euros – the neighboring country pushed the British out of tenth place. Before the Brexit referendum in 2016, the United Kingdom was still fifth in the ranking of German trading partners. Since 2018, the country has been steadily falling.
Obstacles: tariffs and bureaucracy
Great Britain left the EU at the end of January 2020 and has also not been a member of the EU customs union and internal market since January 2021. Despite a last-minute agreement, new tariffs and cumbersome bureaucracy have hampered trade between the UK and the EU in many sectors.
“The burglary has many reasons,” said GTAI. “Brexit is slowing down trade development on numerous levels. And the weak development of commercial investments since the 2016 referendum is inhibiting demand for industrial goods from Germany.” The economic policy course is still unclear, and the severe government crisis with three prime ministers within a year has made recovery more difficult, emphasized GTAI. The economic pre-corona level of 2019 has still not been exceeded.
Weak auto industry
In 2022, for example, exports of industrial machinery, one of the most important export goods, to Great Britain grew below average. “German exports of automotive parts developed particularly poorly.” This was because British car production experienced its weakest production year since 1992 due to the consequences of the pandemic and ongoing supply shortages. The car industry is an important pillar in German-British foreign trade.
“There is no sign of a trend reversal,” the experts judged, referring to the latest forecast by the International Monetary Fund (IMF). Accordingly, the British economy will shrink by 0.6 percent in 2023. In addition, other British projects such as the abolition of numerous remaining EU laws threatened British-European trade.
In addition, there are existing problems caused by disputes about special Brexit rules for Northern Ireland or the posting of employees to the United Kingdom, which inhibits the expansion of locations. “Even the gradual introduction of customs controls is not yet complete on the British side,” GTAI warned.
When asked by dpa, a spokesman for the Ministry of Trade in London emphasized that there were “many opportunities for us and Germany to deepen our trade and investment relationship, especially with regard to green growth, digital and life sciences”.
Source: Stern
