THE Federation of German industry, the BDI, has warned that business are likely to suffer without a long transitional Brexit deal.
The BDI’s head of research, industrial and economic policy, Klaus Deutsch, said a comprehensive agreement would be preferable in order to minimise disruption.
It comes in response to International Trade Secretary Liam Fox insisting it is “not a huge deal” if transitional arrangements when Britain quits the European Union last up until 2022.
Fox has previously said he would be happy with interim measures that lasted a “few months” but now believes it should be wrapped up by the next General Election.
However, speaking to the BBC Radio 4’s The World This Weekend yesterday, Deutsch said: “We would favour a comprehensive agreement. But the most important thing is legal certainty in the period from A to B. If you don’t have a transition period of many years then there will be a huge disruption to all sorts of businesses.
“The concern of business is unless you get a clear cut and legally safe agreement you can’t sell pharmaceuticals, or cars or what have you, across the channel. You have to stop business, divest, change business models.”
Deutsch added that it was “completely unlikely” that German Chancellor Angela Merkel would soften her stance.
“The importance of the European Union for German corporates is even higher than the importance of a bilateral relationship with the United Kingdom. So the priority of safeguarding the four freedoms and the unity of the European Union is much more important than one economic relationship. There are a lot of illusions, it won’t happen.”
“The importance of the European Union for German corporates is even higher than the importance of a bilateral relationship with the United Kingdom. So the priority of safeguarding the four freedoms and the unity of the European Union is much more important than one economic relationship. There are a lot of illusions, it won’t happen.”
Earlier in the day, Fox told BBC’s Andrew Marr Show that he believed people did not want the transition “dragging on”.
“Having waited for over 40 years to leave the European Union, 24 months would be a rounding error. It’s not a huge deal and neither is it an ideological one,” he said.
“I think we would want to get it out of the way before the election, I don’t think people would want to have it dragging on.”
Last week Environment Secretary Michael Gove said the Cabinet was “united” around a transitional Brexit deal to allow continued access to migrant labour and provide economic stability.
Yesterday’s comments from Fox appear to be in stark contrast to that.
Fox was being interviewed from the United States where he is due to meet with the country’s trade representative Robert Lighthizer for two days of talks. The duo will start preparing for a post-Brexit trade deal between the nations.
Following a few other engagements there he will head to Mexico for talks with economy minister Ildefonso Guajardo.
EU rules state that the signing of any deal must wait until the UK has formally exited but Fox is hopeful the talks will pave the way for a future agreement.
“The first meeting of the UK-US trade and investment working group is the start of the next chapter in our special relationship,” he said.
“Although it’s too early to say exactly what would be covered in a potential deal, the working group is the means to ensure we get to know each other’s issues and identify areas where we can work together to strengthen trade and investment ties.”
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