The EU should offer the UK Brexit concessions to protect its economy, German think tank says
The EU should offer the UK concessions in the Brexit negotiations to avoid damaging its economy, a German think tank said.
Gabriel Felbermayr, head of the IFO Institute, said “businesses are suffering already”.
He said German exports to the UK had fallen about 10 per cent in real terms since the 2016 referendum and predicted German GDP could be 0.2 to 0.5 per cent lower in the long term because of Brexit.
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"The uncertainty around this whole process is costing [German business] dearly," he said.
"The big concern is how to get rid of this enormous uncertainty that has been weighing on economic activity for two years now," he said.
Felbermayr urged the EU to soften its hard line to help mitigate potential economic disruption caused by Brexit.
"The EU should, as a quick fix at least, offer to remove both the backstop and the withdrawal agreement's current time limit on the mobility of goods and capital so that the provisional agreement would keep the EU and the UK in a joint customs territory association even after 2020 without making a difference between Northern Ireland and the UK. That would be key," he told the BBC.
Last month the head of Germany’s influential business federation warned that a no-deal Brexit could leave German firms “staring into the abyss”.
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Dieter Kempf, president of the BDI, said: “We are moving dangerously close to a chaotic Brexit”.
The BDI had forecast economic growth in Germany of 1.5 per cent this year, but said it could be significantly lower in the event of a no-deal Brexit.
“If there is a massive disruption in trade between the UK and the EU we assume that growth will be lower,” he said.