German industry chief hits at Brexit delay

Posted on September 6, 2016

German Chancellor Angela Merkel and British Prime Minister Theresa May address a news conference following talks at the Chancellery in Berlin, Germany July 20, 2016. REUTERS/Stefanie Loos TPX IMAGES OF THE DAY - RTSIXXR©Reuters

Different views: UK premier Theresa May (l) and German chancellor Angela Merkel. German industry chiefs have warned against further delay in opening Brexit talks

The head of one of Germany’s leading industry lobby groups has warned that delays in launching the UK’s Brexit negotiations are prolonging the uncertainty hanging over the British economy and hitting investment plans.

    Speaking in an interview with the FT, Eric Schweitzer, head of DIHK, the German chamber of commerce and industry, criticised the decision by Theresa May, UK premier, to postpone talks until next year and failing to set a specific date.

    “The deadlock is creating a situation in which many investments are now held up and will not be carried out because people don’t know . . . what the conditions will be over three or four years,” Mr Schweitzer said. 

    Quality was more important than speed in preparing negotiations, he said. But it was essential that negotiations concluded “in an appropriate timeframe”. 

    Mr Schweitzer, whose organisation represents 3.5m companies and entrepreneurs, said he was not threatening the UK but that it was clear the economic effects of Brexit would be “negative” for the EU and “very negative” for Britain: “Great Britain will suffer economically. That is not a threat but simply the logical consequence of the process.” 

    German companies are already under pressure amid the uncertainty surrounding Britain’s exit from the EU, with the DIHK forecasting a 1 per cent decline in German exports to the UK this year and 5 per cent in 2017.

    However, although the UK was Germany’s third-largest market, the impact of Brexit would be mitigated by the wide diversification among German companies, Mr Schweitzer said. The average exporter from the Mittelstand — the small and medium-sized companies that form the backbone of Germany’s economy — was active in about 10 countries, he noted. 

     Mr Schweitzer rejected suggestions that the UK could model future ties with the EU on the bloc’s existing agreements with Switzerland or Norway. Each country was different, he argued: Switzerland was surrounded by EU members, Norway was an oil producer with no external debt, and unlike the UK neither had ever been in the EU: “There is no blueprint. Nobody has yet left the EU.” 

    Eric Schweitzer, president of the German chamber of trade and industry DIHK, speaks during the Sueddeutsche Zeitung Economic Forum in Berlin, Germany, on Friday, Nov. 22, 2013. German business confidence surged to the highest in more than 1 1/2 years in November, signaling that the economic recovery in Europe's largest economy remains on track even after growth slowed in the third quarter. Photographer: Krisztian Bocsi/Bloomberg *** Local Caption *** Eric Schweitzer©Bloomberg

    Eric Schweitzer, head of the German chamber of commerce and industry, says Germany’s Mittelstand will withstand the impact of Brexit

    The DIHK president, who heads Alba, a family-owned recycling group with 7,500 employees, backs free movement of labour in the EU —
    a principle that has antagonised many in the UK. Putting up barriers to migration would damage the UK and EU economy, he warned: “It can and will lead to less business being done in Britain.” 

    Great Britain will suffer economically. That is not a threat but simply the logical consequence of the process

    – Eric Schweitzer, head of DIHK

    But Mr Schweitzer cautioned EU leaders against putting pressure on London to ignore the referendum result. “The democratic decision has been taken,” he said. “This should be respected and not punished because it is different from what we expected.” 

    Separately, Mr Schweitzer defended the role of German business in working to integrate the wave of refugees who have arrived in the country in the past 18 months. Responding to claims that companies were slow to hire the new arrivals, he said refugees needed two years of language lessons and other preparations before they were ready to take apprenticeships or training posts. The whole integration process would take five to 10 years: “Now we are only in year one after the great rush.” 

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    But, he said, the challenge was manageable given that Germany lacked skilled workers.

    According to government figures, the country has about 600,000 job vacancies — up by 100,000 in two years amid economic growth and an ageing population. Economists estimate that of the 1m-plus migrants who have arrived since early 2015, some 400,000 are of working age and can be prepared for employment.

    “In Germany there is no issue that refugees will take jobs from other people,” Mr Schweitzer said. “But it is a long stony path before we together succeed in completely integrating refugees in training and the labour market.” 

    Mr Schweitzer also intervened in the debate on the TTIP, the controversial planned EU-US trade agreement that has run into strong criticism on both sides of the Atlantic. Playing down France’s call for negotiations to be ended and a statement by Sigmar Gabriel, German deputy chancellor, that the talks had failed, he said TTIP remained “a great opportunity” for German industry.

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    But the negotiating partners and companies alike had to take the “fears and criticisms” of the public” seriously. “In the end, TTIP has to win people over with its content,” he added. 

    Even in Germany, which benefited greatly from world trade, more had to be done to win support, he said, adding: “We have really spoken too little about the advantages of the international division of labour, and of free markets, perhaps because it is self-evident that we for decades have lived with them and profited from them.”

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