German-British Chamber: Brexit two weeks on – where do we stand? What will the future bring?

11 July 2016

 

In the Conservative leadership contest only two candidates have moved forward now. Uncertainty across the political spectrum is still high, markets are volatile and future investment decisions are to some extent on hold. Whether Theresa May or Andrea Leadsom will become Prime Minister, there is no doubt that the referendum result has tasked the future British government to redefine Britain’s relationship with Europe. One thing is certain, the administrative burden on businesses will increase once negotiations are concluded. It is too early to make reliable predictions on the type and amount of extra bureaucracy (passporting for financial services, country of origin rules for globally operating companies, product safety and mutual recognition of professional qualifications are just a few areas that are expected to see changes).

Dr Ulrich Hoppe, Director General of the German-British Chamber comments: “We expect sensible approaches to redefining the relationship with Europe to be developed over the summer. The UK as well as the whole of the EU have a huge interest in the single market staying together and not shrinking in size.”

What are the options – ‘hard Brexit’ under WTO rules or ‘soft Brexit’ with some form of continued access to the single market?

Dr Hoppe hopes that “it will end in a ‘soft Brexit’ giving British companies unhindered access to the European market and vice versa. We strongly believe such a result is possible if an effort is made by all parties concerned.  To achieve this outcome, compromises will be necessary on both sides.  Britain will have to accept some form of free movement of EU workers and the EU will have to accept certain restrictions on at least a temporary basis. In this context, it should not be forgotten” he points out, “that the UK was one of the few countries to immediately open her borders to workers from Eastern European accession countries in 2004, whilst the vast majority of other member states invoked restrictions for seven years.  Given the current level of immigration in the UK, it could be argued that it would now only be fair to offer Britain some temporary restrictions on future immigration from the EU. Whether this is a way forward, remains to be seen, but what is certain is that both sides will have to give on that front.  Once the dust has settled, we are confident that European leaders and the new UK government will work towards finding sensible and practicable solutions.”

For Britain to succeed economically in future, she will have to remain a country open for talent, otherwise companies will be unable to prosper here and be forced to go elsewhere. The EU needs to urgently overcome its structural problems to avoid some companies leaving Europe altogether and moving to the United States, often perceived as a more promising market, especially in high-tech industries. This in turn would weaken the prospects of all European economies, which cannot be in our interests.

Dr Hoppe adds: “To stay open for talent and businesses is a message the new political leadership in the UK will have to take on board and actively sell to the electorate.  This will not be an easy task, but showing true leadership is never easy, as we, from the international business community, know well.  In other words, the road ahead will be bumpy, but we are confident that in the end common sense will prevail on all sides.”

The German-British Chamber will work with its member companies and other bilaterally operating companies to provide the support and advice necessary to minimise the economic impact caused by Brexit.

 

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