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Jakarta Post

German business warns of Brexit 'chaos'

  • News Desk

    Agence France-Presse

Frankfurt, Germany   /   Wed, January 16, 2019   /   06:46 pm
German business warns of Brexit 'chaos' The general manager of the Federation of German Industries (BDI) Joachim Lang (left to right), World Trade Organization (WTO) chief Roberto Azevedo President, German Chancellor Angela Merkel and the president of the Federation of German Industries (BDI) Dieter Kempf attend a conference of the German Industry on September 25, 2018 in Berlin. (AFP/John MacDougall )

Leading German business organisations warned Wednesday of a "chaotic" Brexit that would cause massive disruption to trade, after MPs in London overwhelmingly voted to reject an EU withdrawal deal.

"A chaotic Brexit is coming dangerously close," Federation of German Industry (BDI) director Joachim Lang said in a statement, warning that more than 175 billion euros ($200 billion) of German-British exchanges in goods and services could be affected.

"The top priority must be to avoid a hard Brexit," Lang added. "Responsibility for that lies solely with the government and the opposition in London."

British Prime Minister Theresa May faces a no-confidence test in Westminster late Wednesday after MPs rejected her hard-fought pact with Brussels by 432 to 202 votes.

Without a withdrawal agreement, Britain will abruptly tumble into "third-country" status after March 29 and face regulatory and tariff barriers to trade with the EU, rather than enjoying an almost two-year "transition period" when present rules will still apply.

For firms, "I believe it won't be possible to prepare properly for the chaos," Martin Wansleben, director of the Association of German Chambers of Commerce and Industry (DIHK) told public broadcaster SWR2.

Wansleben pointed to the car industry with its continent-spanning supply chains as a key sector that would be disrupted by Brexit.

"If they no longer have the same rules as in Europe, if they must pay tariffs, then it's increasingly unrealistic or no longer economically rational to produce for all of Europe in such a country," he said.

Germany's car industry is present in the UK with production sites like BMW's Mini plant in Oxford or two factories belonging to Vauxhall, a subsidiary of Peugeot-owned Opel.

"Without an orderly and workable solution for economic exchanges, jobs in the car industry are at risk, especially on the British side," warned Bernhard Mattes, president of the  VDA carmakers' federation.

Meanwhile Federation of the German Chemical Industry (VCI) head Utz Tillmann predicted "damage far beyond our industry" if supply chains were disrupted.

Governments on both sides must agree "transitional solutions" to preserve the most essential trade even in case of no deal, Tillmann said.

"In particular, this is about supplies of medicines in the UK."