German firms lower UK export sights as Brexit bites eurozone

Thu Jul 7, 2016 8:46am EDT
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By Paul Carrel and Michael Nienaber

BERLIN (Reuters) - Germany's chambers of commerce lowered its sights for exports to Britain on Thursday, forecasting a darkening trade outlook as the impact of Britons' vote to leave the European Union seeps into the euro zone economy.

Trade ties between Britain and Germany, Europe's largest economy, are close: Britain is Germany's fifth-biggest trading partner for goods. For the UK, Germany is the biggest partner.

But Britons' June 23 vote to leave the EU is feeding German businesses' uncertainty about their future trading relationship with Britain. Chancellor Angela Merkel has insisted London not be allowed to "cherry pick" parts of the EU it wants to keep.

"Brexit will hurt the German economy in the long term," said Eric Schweitzer, president of the DIHK Chambers of Industry and Commerce, which now sees a 1 percent drop in exports to Britain this year, down from a previously expected 5 percent rise.

In 2017, it expects a 5 percent fall in exports to Britain.

"Companies will export less to Britain, they are planning to scale back investment and staffing on the island and they are afraid of more trade barriers," added Schweitzer.

Such statements have major implications for Britain, where German companies employ some 500,000 workers, according to German Industry UK, an organization of some 100 chief executives of companies in Britain with a German majority shareholding.

German employers in Britain include BMW (BMWG.DE: Quote), whose British employees make Rolls-Royce cars, and industrial giant Siemens (SIEGn.DE: Quote). Both warned their British employees about the risks their businesses would face from Brexit.   Continued...

The European Union and German nation flags are pictured before a debate on the consequences of the Brexit vote at the lower house of parliament Bundestag in Berlin, Germany, June 28, 2016.    REUTERS/Fabrizio Bensch