Brexit threatens German industry supply chains
Staff Writer | July 26, 2017
Britain's departure from the European Union puts the trans-national supply chains of German industries at risk, a report by the Cologne Institute for Economic Research (IW) warns.Article continues below
"Complex existing supply chains could be torn apart by Brexit in a worst case scenario," IW economist and author of the report Berthold Busch said.
Continental industries have become increasingly interwoven as a consequence of EU integration, with individual parts often crossing several national borders before being fitted in a final product, said the report.
In 2014, British firms supplied preliminary goods and services worth roughly $200 billion to the European Union. 36 billion thereof went to Germany alone.
Such cooperation was now endangered, according to the report
At the very least, trade would become more expensive due to the imposition of tariffs if a free trade agreement between Britain and the EU was not achieved, it added.
"German industry would be hard hit without a free trade agreement," Busch warned.
The situation was no better for British producers, where service providers above all feared losing access to European and German customers.
Ultimately, German consumers would have to pay the price for more expensive products if the EU and Britain do not minimize tariff- and non-tariff barriers to the flow of goods, services, capital and labor, the report said. ■ What to read next
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