Great Britain falls out of the top ten of German trading partners

Gwynt y Mor offshore wind farm

The offshore wind industry is one of the few sub-sectors where trade between Germany and Great Britain has increased.

(Photo: dpa)

London Great Britain loses as a trading partner for Germany increasingly important after Brexit. This year, the United Kingdom will drop out of the top ten German trading partners for the first time in recent history. This emerges from an analysis by the federal company Germany Trade and Invest (GTAI), which is available to the German Press Agency in London.

The calendar and seasonally adjusted exchange of goods between January and October grew by 13.7 percent compared to the same period last year, mainly due to inflation. However, the entire German foreign trade in goods increased by 20.7 percent in the same period. Most recently, the Czech Republic overtook Great Britain in the ranking of the most important trading partners. The lead is “significant and can hardly be made up for in November and December,” commented GTAI.

“The slow development in German-British foreign trade is not a new trend,” emphasizes the report. Since 2017 – the first full year after the Brexit referendum – the UK’s importance has been steadily declining. At that time it was still the fifth most important foreign trade partner.

There were other reasons for Brexit. “Both the coronavirus pandemic, energy price-driven inflation and the monetary policy turnaround of the Bank of England have thrown the British economic engine out of sync,” it said. “The consequences of Brexit amplify the effect because trade across the customs border has become more expensive,” says GTAI.

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There is still uncertainty. “Almost three years after the British exit from the EU, the country’s post-Brexit economic policy course remains unclear and is unsettling British companies.”

Great Britain had the end of January 2020 European Union left and since January 2021 is no longer a member of the EU customs union and the single market. The Brexit trade agreement agreed at the last moment ensures freedom from customs duties in most areas. Nevertheless, there are difficulties in trading due to increased bureaucratic requirements. The introduction of expensive and time-consuming work visas for skilled workers also makes cooperation more difficult.

No improvement in sight in 2023 either

According to GTAI, the outlook for 2023 also gives little hope, especially since the central bank believes that Great Britain is heading into a long recession and companies are likely to be even more hesitant to invest. This affects the delivery of vehicles, industrial machinery and chemical products, where Germany is one of the most important suppliers.

“With recession on the horizon, rising financing costs and a rise in UK corporation tax from 19% to 25% in April 2023, there is no sign of a turnaround in sight,” the report notes.

Of particular interest to German companies are a few smaller sectors, which have developed much more strongly despite the economic problems. These included healthcare, offshore wind energy and infrastructure construction. The GTAI notes mixed signals from the important automotive industry, the most important pillar of German-British trade.

If the British car market actually grows significantly in 2023, this could mean a turnaround, it said. E-cars are an important driver, and the sale of new cars with classic combustion engines is to be banned from 2030. The question here is whether Great Britain can build sufficient so-called gigafactories for battery production in good time.

More: Bundestag approves trade deal with Canada – “Now Ceta will get going”

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