The Brandenburg Gate in Berlin, Germany, witnessed a significant decline in trade and investment ties between the United Kingdom (UK) and Germany after Brexit, labeling it an “economic disaster,” according to German economists. Following the UK’s decision to exit the European Union (EU) in 2016, the country left the EU’s single market in 2021. Volker Treier, head of foreign trade at the German Chamber of Industry and Commerce (DIHK), expressed his concerns, stating that Brexit has negatively impacted both sides of the channel. In 2021, Germany’s exports to the UK dropped by 14.1% to €73.8 billion ($80.57 billion) compared to 2016. Additionally, the UK, once Germany’s third most significant export market, slipped to eighth place by 2022. Overall, as a trading partner considering combined exports and imports, the UK has also lost importance, falling from fifth to eleventh place. Furthermore, German direct investment in the UK witnessed a decline of 16.1% in 2021, amounting to approximately €140 billion. The DIHK reported a decrease of 5.2% in the number of active German companies in the UK since 2016, while many British companies have relocated to Germany. Since the Brexit vote, Germany Trade and Invest (GTAI), an organization that assists international companies in establishing business in Germany, has observed over 1,000 new businesses from the UK, with 170 new businesses in 2021 alone. GTAI Managing Director Robert Hermann expects continued high levels of inquiries from the UK, emphasizing the importance for British companies to maintain a foothold in the EU. Germany’s size and central location contribute to its appeal in attracting UK companies. Treier highlighted the challenges faced by German businesses in the UK due to planning and legal uncertainties resulting from Brexit. The departure of the UK from the EU has disrupted close trade relations between the two countries. German car manufacturers have even called for a postponement of post-Brexit rules implementation. Overall, Brexit has had a detrimental impact on the economic ties between the UK and Germany, affecting trade, investment, and the position of both countries as important partners.
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