19. July 2016
The consequences of Brexit for Bavaria and the EU
The historic decision of the United Kingdom to leave the European Union (EU) in a referendum on June 23, 2016, came as a shock to Europe as well as to Bavaria and the Bavarian economy.
Bertram Brossardt, CEO of the Bavarian Industry Association (vbw), called the event a black day for Europe. He warned that the negative consequences of a British exit from the EU (“Brexit”) would be harmful to the EU and the UK. Both the British pound and the UK real estate market got under pressure very early. Over the long term, the UK risks declining employment and an economic slow down, given that the EU is the UK’s main export market.
Brossardt warned that the negative repercussions of Brexit could also be significant for Germany and Bavaria. After all, 8,6 percent of Bavarian goods go to the UK, making it its second-largest export market after the US. An extended uncertainty over the UK’s future relationship with the EU would also erode consumer confidence and result in a slow down of investment across Europe.
In order to reduce the period of uncertainty, Brossardt calls on the EU and the UK to define its new relationship as quickly as possible. The damage to the Bavarian and European economy must be limited, and good trade relations preserved.
In addition, Brossardt cautioned the EU against going back to “business as usual”. The UK’s decision must be a wake-up call for the EU to convince all Europeans of the benefits of the EU.
Winning back the confidence of EU citizens is going to require increased efforts to boost its competitiveness, complete the single market, pursue its digital agenda and reach financial stability.
The vbw and Bavaria stand ready to support the EU, which has secured peace and prosperity in Europe through many decades.
The vbw has updated its position paper (in German) on the consequences of Brexit, which you can download here .