Brexit: German firms fear 'massive cost increases'

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Media caption,
Bernd Atenstaedt said some German firms may reconsider their UK presence

German-owned companies based in the UK are worried Brexit might hit them through "massive cost increases".

Bernd Atenstaedt, chairman of German Industry UK, told BBC Wales some firms may consider pulling out depending on the terms of the deal to leave the EU.

The UK Government has said it wants continued free trade with the EU.

The Welsh Government said Germans were "valued inward investors in Wales, employing more than 12,000 people across 90 companies".

Airbus - in which the German and French states are the joint largest shareholders - employs 5,000 people in Wales, followed by transport company Arriva with 2,600 workers. Siemens has 500 and Rehau 400.

Dr Atenstaedt told the Sunday Politics Wales programme: "We now have a lot of challenges.

"Because we have no idea at the moment what's going to happen once the UK is going to start negotiations in Brussels, once Article 50 is initiated and properly starting in April.

"We have looked at all of the various ... possibilities - massive cost increase, possible for us and we are not happy."

Image source, Getty Images

He said German businesses were very keen to stay in the UK but that could change in future.

"Obviously we have to consider what the outcome is," he added.

"If it's a massive cost increase we might have to consider is it worth continuing in the United Kingdom.

"At the moment I would say to you I have not heard of any German enterprises in the United Kingdom saying 'this is it, we are going to go out of the UK'.

"We all wait now for the outcome of the negotiations once Article 50 is initiated and we will make a decision about the future.

"It is such an important market and such a vital country we are not going to leave here, we are going to continue here but there might be one or two reconsidering it."

Image source, PA
Image caption,
Train company Arriva is one of the biggest German-owned employers in Wales

German Industry UK has written to Prime Minister Theresa May and Wales' First Minister Carwyn Jones outlining the concerns of German businesses.

The letter says: "We are concerned about the outcome of the negotiations between the British Government and the European Commission" and hopes the UK government "takes into account not only the views of British, but also of foreign businesses in the UK".

It outlines key areas of concern over Brexit which the firms fear may lead to higher costs:

  • Volatile exchange rate
  • New tariff and non-tariff barriers
  • New customs payments
  • Different rules and regulations
  • Higher transfer prices
  • Re-organising supply chains
  • Changes to company financing

A Welsh Government spokesman said: "In 2015-16, German companies were the second largest investor in Wales, creating and safeguarding more than 1,500 jobs.

"Conversely, 67% of Welsh exports go to Europe, with a quarter of our exports going directly to Germany.

"It is therefore essential we maintain full, tariff-free access to the single market's 500 million customers after the UK leaves the European Union."

The UK government's Brexit White Paper - published on Thursday - sets out the goals first announced by the prime minister in January.

Mrs May pledged the UK would withdraw from the single market and seek a new customs arrangement and free trade agreement with the EU.

A spokesman for the UK's Brexit department said: "When the UK leaves the European Union, the strong relationship with have with Germany and the important mutual trade and business links we share will endure.

"We will pursue a new, positive and constructive relationship with all member states of the EU and will seek to secure a deal that is in our mutual interests.

"Naturally, we are keen to work with foreign businesses operating and trading here, and are taking into account their views as well as British businesses."

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