Brexite worries medium-sized businesses

More than three and a half years after the brexite referendum, Great Britain is today leaving the European Union. Politically, this means that relations between the EU and the former member have changed somewhat, but economically, everything will remain the same for the rest of the year. Until then, the EU internal market and customs union will continue to apply. In the coming months, negotiations will take place on how economic relations will look after the end of the transition period. Even a withdrawal without a free trade agreement is not off the table. A new EU external border in the English Channel would mean the reintroduction of customs duties, border controls and complex border formalities, making the exchange of goods more expensive and delaying it.

This would also affect many German SMEs. In our current survey of small and medium-sized businesses, only 39 percent of those surveyed said that they would not be affected by such a brexite. In each case, around a third of the SMEs expect demand from the UK to fall, import costs to rise and customs duties to make the UK uninteresting as a sales market. Even more than half fear an increase in bureaucratic obstacles.
The chemical and plastics industries would be directly affected at sector level. Here, a third of those surveyed said that they would suffer from Britain leaving without a free trade agreement. The metal, automotive and mechanical engineering industries, the electrical industry and also trade were also affected to an above-average extent. The more companies are affected, the more affected they are.
However, some SMEs have already taken precautions. For example, just under 17 percent of those SMEs that expect the effects to be felt expanded their inventories in order to prevent possible supply bottlenecks. Other precautions, such as adjusting supply chains, which we were able to demonstrate in our study of 27 January („Brexit: German companies anticipate adjustments“), have already been taken by almost 18 percent.
The current brexite situation thus continues to cause concern to German SMEs. But they are not unprepared.

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