Three years of EU exit
Brexit is constantly causing new concerns for the economy
December 25, 2023, 7:02 a.m
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Great Britain and the EU – the separation has now lasted three years. A time when getting used to it has set in. But the problems remain and new ones keep appearing. There will be new challenges for the economy in 2024.
Three years after the final Brexit, the consequences of Britain’s exit from the EU continue to cause concern for the economy on both sides of the English Channel. “Among the main victims of Brexit are smaller companies who have often given up,” said the German ambassador to London, Miguel Berger. “It’s a bit of a cost for the big companies, but they’ve gotten used to dealing with it.”
Bilateral trade is estimated to have fallen by 10 to 15 percent since Brexit. Great Britain has now slipped out of the top ten of Germany’s most important foreign trade partners. Great Britain left the EU at the end of January 2020. Since January 1, 2021, the country is no longer a member of the EU Customs Union or the internal market. This led to considerable delays in trading, especially at the beginning.
The head of the German-British Chamber of Commerce and Industry (AHK) in London, Ulrich Hoppe, said that the economy has now largely adapted to the new conditions. Trade is growing again – this gives hope for the future that parts of the Brexit dent can be compensated for in the medium term. Sectors such as renewable energies in particular have potential, said Hoppe. “German technical expertise can help unlock the great potential of renewable energy in the UK.”
Underwriting will cause delays
But EU food exporters could face new problems. After several postponements, Great Britain now wants to introduce import controls for animal and plant products. “Of course they pose challenges for this sector, but for the entire breadth of the German-British economy the effects of the new regulations are rather small,” said Hoppe. York-Alexander von Massenbach from the British Chamber of Commerce in Germany (BCCG) said the expected risk assessment of the goods would lead to additional organizational effort and delays.
The warnings on the British side are greater. For many British companies, EU regulations such as the CO2 tax make it easier to trade with countries further away than with the EU, the head of the British Chambers of Commerce (BCC), Shevaun Haviland, recently told the Financial Times. In particular, sectors such as agriculture and chemicals, which had already been hit by new Brexit tariffs, are now confronted with reporting obligations on supply chains, CO2 emissions and the use of plastic packaging. Haviland called for the British government to adapt its rules to those of the EU.
Limit immigration through required annual income?
The German economy has been particularly thorny about the residency regulations since Brexit, which make it more difficult to send skilled workers at short notice and make permanent relocation more expensive. The conservative British government recently announced that it would significantly increase the required annual income for foreign workers in order to limit net immigration. “Especially for younger people who are looking to start a career here, these hurdles will be difficult to overcome,” said Ambassador Berger. But schools or cultural institutions would also not be able to pay the higher salaries.
As a result, Great Britain has lost a lot of its attractiveness, said BCCG expert von Massenbach. Academic exchange has suffered major losses. “Companies based in Great Britain are also increasingly running out of arguments for dealing with complex, constantly changing visa options in order to offer internships or traineeships for a limited period of time.”
The consequences of a further change cannot yet be foreseen. With the new year, the primacy of initially adopted EU law in Great Britain will end in areas such as trade, competition, employment and consumer protection. Massenbach expects growing legal uncertainty. “Affected companies must remain vigilant in order to be able to react quickly to changes. There will probably be an associated increase in bureaucratic and cost-related costs, at least in some areas,” said the partner at the business law firm GSK Stockmann in London.