- German imports from UK plunge 11% in first six months
- Falling trade volumes bring Great Britain out of the “Top Ten”
- Small businesses can’t afford the extra burden of customs checks
- British companies are worse off than Germans – Chamber of Commerce
BERLIN, September 8 (Reuters) – Britain is set to lose its status as one of Germany’s top 10 trading partners this year for the first time since 1950, as Brexit-related trade barriers grow companies in Europe’s largest economy look for business elsewhere.
Britain left the European Union’s single market at the end of 2020, after more than four years of wrangling over the terms of its divorce in which German companies had already started to cut ties with the UK.
In the first six months of this year, German imports of British goods fell almost 11% year-on-year to 16.1 billion euros ($ 19.0 billion), according to agency data. federal statistics reviewed by Reuters.
While German merchandise exports to Britain rose 2.6% to 32.1 billion euros, this could not prevent a decline in bilateral trade, from 2.3% to 48.2 billion euros – pushing Britain to 11th place from ninth place, and fifth before it votes to leave the EU in 2016.
A December 2020 survey by the German trade association BGA showed that one in five companies are reorganizing their supply chains to swap UK suppliers for others in the EU.
This trend was becoming more and more marked, even if British companies were even worse off, said Michael Schmidt, chairman of the British Chamber of Commerce in Germany, making any turnaround before the end of this year unlikely.
“More and more small and medium-sized businesses are stopping trading (in Britain) because of these (Brexit-related) obstacles,” Schmidt told Reuters.
The sharp drop in the first half of the year was also due to ripple effects before new hurdles, such as customs checks, kicked in in January.
“Many companies anticipated the problems … so they decided to push imports forward by increasing stocks,” he said.
“KICK IN THE FOOT”
While this effect boosted bilateral trade in the fourth quarter, it reduced demand early this year, while problems with new customs controls also complicated trade from January.
The UK’s poor performance is not just due to a poor January which pushed the average down in the first six months of 2021.
In May and June, two-way merchandise trade between Germany and the UK remained below levels at the end of 2019, unlike all other major German trading partners.
“The UK’s loss of importance in foreign trade is the logical consequence of Brexit. These are probably lasting effects,” Gabriel Felbermayr, president of the Institute for the World Economy (IfW) based, told Reuters. in Kiel.
A breakdown of the data showed that German imports of British agricultural products fell by more than 80% in the first six months, while imports of pharmaceuticals almost halved.
“Many small businesses simply cannot afford the added burden of keeping up to date and complying with all imposed customs rules such as health certificates for cheese and other fresh produce,” Schmidt said.
But the new trade realities had hurt British businesses even more than German businesses, which were more accustomed to dealing with different customs regimes around the world, as many had exported to various non-European countries for decades.
“In Britain the situation is different,” Schmidt said, adding that many small businesses had exported mainly to the EU and therefore had to start from scratch when faced with new customs checks.
“For many small UK businesses, Brexit meant losing access to their most important export market … it’s like shooting yourself in the foot. And that explains why German imports from Grande -Brittany are now in free fall. “
He expressed hope that part of the decline might be temporary. “Businesses are normally always in a good position to adapt quickly, but it takes time.
($ 1 = € 0.8455)
Reporting by Michael Nienaber and Rene Wagner Additional reporting by Andy Bruce in London Editing by John Stonestreet and Gareth Jones
Our standards: Thomson Reuters Trust Principles.