May 23, 2017

Brexit – A long way to go

On March 29, 2017, nine month after British voters chose for the United Kingdom (UK) to leave the EU, Prime Minister Theresa May has officially announced the Brexit to the European Council. Ever since, time is running. Within two years, the UK and the EU have to mutually agree on new conditions concerning their future partnership – a mammoth task considering the diametrically opposed interests of both parties.

Negotiation guidelines of the European Council

On April 29, 2017, the European Council defined official EU guidelines for negotiations. During this process, EU leaders unanimously agreed that maintaining the four fundamental freedoms of the internal market – the free movement of persons, goods, services, and capital – is an indispensable condition. In addition they would not discuss a future trade deal with the British government until “sufficient progress” is made in the matters of maintaining the status and rights of EU citizens, the financial obligations of the UK towards the EU, and a solution concerning the border in Ireland. It was made clear that the UK cannot pursue a strategy of cherry picking.

vbw advocates a smooth transition in the interest of business

Nevertheless, the European business community is hoping for a business friendly outcome. vbw – The Bavarian Industry Association is advocating the lowest possible hurdles in trade between Germany and the UK while ensuring that it is still more attractive to be part of the EU than being outside. Brexit must not set a precedent for other member states. Furthermore, the negotiations have to be performed as transparently as possible in order to avoid major uncertainties in the financial, product and labor markets. vbw also emphasizes that free movement of labor including the right of seconding employees from the EU to the UK and vice versa is indispensable for economic growth in both places. Brexit must not harm German companies in the UK. Data security, trademark protection, antitrust law and funding guidelines have to remain on a high level.

What to expect?

It is generally anticipated that Brexit will lead to a decline in growth, private consumption, and investment in the UK – especially foreign investments will decrease. The UK is the third largest export market for Germany and Bavaria. Therefore, this development will affect German and Bavarian exports. For Germany and especially Bavaria, the British automotive market is of major importance: 18 percent of all cars exported from Bavaria were delivered to the UK. For that and many other reasons, it is in the interest of all of us to conduct the negotiations in a “spirit of goodwill, sincere cooperation and with the aim of establishing a close partnership between the UK and the EU going forward” as David Davis, the secretary of state for exiting the European Union, put it.


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Volker Pitts-Thurm

Leiter Verbindungsbüro Brüssel

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