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'Brexit, so what?' German firms expect little fallout, says poll

By Joseph Nasr

By Joseph Nasr

BERLIN (Reuters) - A large majority of German companies expect Britain's divorce from the European Union to cause little if any damage to their business, according to a poll published by the Cologne Institute for Economic Research (IW) on Monday.

The IW poll comes after Prime Minister Theresa May warned continental European countries that they stood to lose from Brexit if they failed to offer Britain a reasonable deal.

She said there are voices in Europe wanting a "punitive deal" that punished Britain and discourages others from taking the same path. "That would be an act of calamitous self-harm for the countries of Europe," she said in a speech on Jan. 17.

But the IW survey, entitled "Brexit, so what?" found that more than 90 percent of the 2,900 companies surveyed either said they expected no damage at all or very little harm.

Only two to three percent - mainly companies in the industrial sector - said they expected Brexit to have a major impact on their investments and workforce.

Germany, the EU's largest economy, has stressed the importance of maintaining open trade ties with Britain after it leaves the bloc. Finance Minister Wolfgang Schaeuble said last week the German government would try to minimise any damage to both the EU and Britain during the Brexit negotiations.

THIRD-LARGEST EXPORT MARKET

About a fourth of those polled said they expect Brexit to have a positive effect, some saying that it could for example lead to a rise in foreign investment in Germany.

The findings contrasted with expressions of concern from German car makers and farmers, among others, about the possible negative impact of a "hard Brexit" - in which Britain would also lose the EU's single market - on bilateral trade.

Britain is Germany's third-largest export market after the United States and France. Exports to Britain stood at 80 billion euros in the first 11 months of last year.

May made clear last week that Britain would indeed quit the single market in order to regain full control of its laws and its borders.

More than 60 percent of German companies in the IW poll said they preferred a "soft Brexit" - essentially one that kept Britain in the single market.

During last year's referendum campaign, supporters of Brexit argued that the EU would be keen to forge a strong free trade deal with Britain because it sells much more to the UK than vice versa, meaning it had potentially more to lose in trade terms.

The Brexit negotiations are expected to start after Britain triggers the formal talks by the end of March, ushering in a two-year divorce period.

(Additional reporting by Matthias Sobolewski; Writing by Joseph Nasr; Editing by Jeremy Gaunt)

 

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