German manufacturers are becoming concerned about the possibility of a no deal Brexit according to a new report. Although Chancellor Angela Merkel told Der Spiegel at the weekend that she expects a no-deal Brexit would have a "relatively small" impact on the German labour market, the nation's DIHK Chambers of Commerce begs to differ.

Increasing concerns over Brexit

In a new report, the organisation says manufacturers are becoming increasingly concerned about Brexit, not least because it is coming at a time of worsening conflicts and barriers in global trade, headlined by President Trump's tariff war with China."German companies are very worried over whether solutions can be found," said the report. "Brexit is going to bring immense challenges with profound consequences. All sides need to be aware of the economic stakes involved."Germany is one of the UK's most important trading partners and vice versa. UK trade with Germany in 2016 amounted to £75.1 billion of imports and £49.1 billion of exports, making Britain Germany’s fourth largest export/investment market after the US, France and China. For the UK, Germany is the second largest export market after the US.

Jobs in Germany dependent on UK trade

About 750,000 jobs in Germany are estimated to be dependent on trade with the UK. There are 1,400 British companies operating in Germany with about 240,000 employees.Earlier this year, a DIHK survey of 900 German firms operating in Britain showed just 12 per cent expected an improvement in business prospects, with 36 per cent expecting a deterioration and the remainder anticipating no change. Eric Schweitzer, the organisation's president, said that Brexit was "unsettling many German businesses”, adding, "The politics of trade sanctions is taking on ever greater and sadder proportions for German companies operating abroad. Firms don't know whether they will be hit by new tariffs and how US sanctions will affect financing."

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Many businesses in Germany are still hoping the UK reverses its decision to leave the EU, according to Joachim Lang, the head of the Federation of German Industries (BDI), which has set up a Brexit taskforce of more than 200 experts to assess the risks. “The risk of a hard Brexit is growing by the day,” he told the Rheinische Post newspaper. “Every business would do well to prepare for this worst-case scenario.“What’s new is that the British government itself is now warning about the possibility of a hard Brexit It is carefully preparing its population for that.“The (UK is) an exceptionally liberal and market-orientated country. We would like to continue with them as a partner in the EU. That’s why many in industry want the British to reconsider leaving. Whether that’s realistic or romantic is another kettle of fish. We’re telling our businesses: prepare for the worst, and hope that it turns out better.”

German pharmaceutical companies planning for hard Brexit

The German government has asked pharmaceutical companies to examine their supply chains lest a no-deal Brexit results in shortages of essential drugs.More than 2,600 drugs on the German market have some stage of manufacture in the UK and 45 million British patient packs are supplied to other European countries each month. Germany's Federal Institute for Drugs and Medical Devices has ordered the country's main drug industry associations to gather information on the impact of a no-deal Brexit, according to a health ministry spokesman.All German drug makers, including Bayer, Merck and Boehringer Ingelheim, and foreign suppliers such as Teva and Roche, have been asked to plan for the "worst-case-scenario of a hard Brexit".Even Germany's financial sector ­– which expects to be one of the big Brexit winners with London-based banks setting up new European hubs in Frankfurt, creating or relocating up to 10,000 jobs – has its concerns over the UK leaving the EU without a trade deal.“The biggest beneficiary of Brexit will be New York, not Frankfurt,” said Jörg Asmussen, formerly a senior executive in Germany’s finance ministry and now European head of the investment bank Lazard. “We will have a fragmented financial market. That’s not positive.”  

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