The future of the UK–Germany trading relationship after Brexit

posted by Greg Davidian
in Law
22 August 2018

What will the Anglo-German trading relationship look like post-Brexit? “It’s complicated” might be the best analogy.

The idea of a love-hate relationship between the two countries is a bit of a cliché – with an element of truth. However, one thing that is undoubtedly true is the objective strength and value of the relationship.

Statistics show that the UK is one of Germany’s most important trading partners and vice versa. UK trade with Germany in 2016 amounted to imports at a level of £75.1bn and exports of £49.1bn. The UK is Germany’s fourth largest export/investment market worldwide after the US, France and China, while Germany is the UK’s second largest export market after the US.    

With that in mind, what can be expected after Brexit? Much remains up in the air. We know that the UK is firmly scheduled to leave the EU on 29 March 2019. There may be a transitional arrangement until the end of 2020, safeguarding access to all EU markets to allow more time for final trade negotiations to conclude. But the terms of departure have not yet been agreed. For now, the “Chequers Agreement” forms the basis of detailed negotiations with the EU.

But leaving aside all the political and legal negotiations, what does the Anglo-German relationship really look like? In my experience, as a bi-lingual, dual-qualified lawyer with many years’ experience working in the UK with German firms, I would say the relationship is much warmer than folklore may suggest. 

Close commercial and cultural ties have grown up over a closely intertwined history. As recently as 1714, a German (George I), became King of Great Britain and Ireland. Despite the tragedies of the World Wars, I see two countries and business cultures today that are far more alike than they often dare to admit. There exists a certain competitive element with keen comparisons being made, by politicians and the media, on which country is achieving greater success.

The UK has its great tradition, history, and culture, which also provide a basis for its soft power and influence in the world, while Germany has made its name for its economic prowess and export-orientated economy.

On a business level, both countries hold a similar ethos and culture. They both value a results-driven, hard-working, business-orientated approach to running their economies. This shared ethos can often result in making it easier to conduct business with each other and helps to explain why the volume of business undertaken between the two countries is as great as it is.

The terms of the UK’s future relationship with the EU are of vital importance and many thousands of jobs rely on a smooth functioning trading relationship. It would be naïve to think that new barriers to trade resulting from Brexit will not have some impact. However, whatever the outcome, I am confident businesses will learn to adapt to the new rules and work around them, as they have done in the past.

The UK and German markets are of great importance to both countries. Existing business connections and mutually beneficial supply chain relationships are too great and too established to let the introduction of any barriers and difficulties arising through Brexit to stand in the way of lucrative trading arrangements, even if modifications become necessary.

Although still contentious, it seems clear that much EU law will continue to apply to the UK during any post-Brexit transition period. UK government legislation – in the form of the European Union Withdrawal Act 2018 – seeks to deliver continuity. Most directly applicable EU law and UK law that implements EU requirements will continue to apply on either side of “exit day” – even if changes may be made over time. 

The next months will be pivotal for both the UK and Germany in determining the precise terms of the future trading relationship. But whether you’re looking at the relationship from the perspective of relationships and cultures, or contracts and supply chains, everything I see says there is a mutual desire and interest to keep the show on the road, and maintain a relationship forged through history.

Greg Davidian is a solicitor and Rechtsanwalt at Greenwoods GRM in London, and heads up the firm’s German desk.

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