The EU Should Make More Brexit Concessions To The UK, Says German Think Tank

According to one of the better known German economic think tank, more concessions should be offered to the UK over Brexit.

Steps should be taken to keep the “EU and the UK in a joint customs territory after 2020”, said the head of the IFO Institute, Gabriel Felbermayr, in an interview with the BBC. The uncertainty over the terms and conditions of the UK’s divorce with the EU is affecting a hots of German firms, Felbermayr said. “Businesses are suffering already,” he said.

Since the summer of 2016, there has been a drop of 10 per cent in real terms in German exports to the UK, Felbermayr, director of the IFO, said in the interview. There can be significant negative impact on the German economy in the short term while there can be a permanent decline of anything between 0.2 and 0.5 per cent to the German GDP in the long-run, the IFO has calculated. “The uncertainty around this whole process is costing [German business] dearly,” Felbermayr said.

The uncertainty about whether there would be tariffs or controls at the borders is not among the major concerns for German companies. “The big concern is how to get rid of this enormous uncertainty that has been weighing on economic activity for two years now,” he said.

A softer approach should be taken by the EU towards the UK, said Felbermayr even though a tough stance is being maintained by German business groups so as not to undermine the stance taken by the European Commission in negotiations with the UK.

“The EU should, as a quick fix at least, offer to remove both the backstop and the withdrawal agreement’s current time limit on the mobility of goods and capital so that the provisional agreement would keep the EU and the UK in a joint customs territory association even after 2020 without making a difference between Northern Ireland and the UK. That would be key,” he said.

Felbermayr said that the Commission has been urged to be softer on the UK and to make more concessions for the UK by members of big business in Germany. He said that this was necessary because it is widely accepted that there would be quite a bit of impact for both the UK and the EU in the eventuality of a hard or a no deal Brexit.

The remarks by Felbermayr were made at a time when a host of UK based companies have raised accusations against the country’s government that they have been left “hung out to dry” if there is a no-deal Brexit when the UK leaves the EU on March 29, the scheduled date of the departure of the UK from the EU. According to the British Chambers of Commerce (BCC), there are still 20 key questions that have not been resolved even as there is less than 50 days for the imposition of Brexit.

(Adapted from

Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability

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