IHK Schwaben warns companies: Hard Brexit is likely

Brexit is getting closer. Britain and the EU recently agreed on a draft withdrawal agreement. Nevertheless, the Bavarian-Swabian economy cannot breathe a sigh of relief.

With the approval of the European heads of state and government at the special EU summit on Sunday, the withdrawal agreement cleared another hurdle. According to the Swabian Chamber of Commerce and Industry, there are still strong doubts as to whether the British Parliament will approve the agreement with the required majority.

Hard Brexit is likely

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“A hard Brexit without an exit agreement is now the most likely scenario,” says Jana Lovell, Head of the IHK International Business Unit. “If the British Parliament does not approve the current treaty, it is an open question when a ‘no-deal Brexit’ would take place,” Lovell continued. In the case of new elections, the Chamber of Industry and Commerce believes that it is conceivable that a successor government will ask for the Brexit of March 29, 2019 to be postponed. With a view to the upcoming European elections in May, however, this results in additional complexity.

Businesses need to prepare

The IHK Schwaben therefore continues to recommend that affected companies prepare for an unregulated Brexit. Brexit means a particularly big change for companies active in Great Britain that have previously only been active in the European single market. “For these companies in particular, it is time to get to grips with the export regulations and develop basic knowledge of customs law,” advises Jana Lovell, head of the IHK International business unit.

Less trade with Britain

Since the Brexit referendum in 2016, Bavaria’s trading volume with the United Kingdom has been falling. The country ranks seventh in the ranking of the most important trading partners. In 2016, the United Kingdom was ranked 5th.

Although the total Bavarian exports and imports during the first nine months of this year show positive growth compared to the same period last year, the trade figures with the United Kingdom are significantly below the values ​​of the previous year. From January to September 2018, exports fell by 6.5 percent and imports by 7.3 percent. Around 500 companies from Bavarian Swabia maintain active business relationships in the United Kingdom.