UK on course to drop from Germany’s top 10 trading partners

The UK is expected to drop out of the list of Germany’s top 10 trading partners by the end of this year, official German statistics suggest.

Germans spent £13.8bn, or nearly 11%, less on British goods in the first six months of 2021, according to data from the Federal Statistics Office. The UK has been in Germany’s top 10 trading partners since 1950.

But with Brexit-related hurdles taking a toll, it looks set to drop to the 11th spot by the end of 2021. The UK left the European Union’s (EU’s) single market – which allows frictionless trade and the free movement of people between its members – at the end of 2020 after four years of wrangling.

Since then, customs checks have been implemented, which have complicated trade. As a result, German companies have been looking to source goods from EU suppliers instead of UK ones – and this trend is increasing, an expert said.

“More and more small and medium-sized companies are ceasing to trade [with the UK] because of these hurdles,” said Michael Schmidt, president of the British Chamber of Commerce in Germany.

They “simply can’t afford the extra burden of keeping up to date and complying with all the kicked-in customs rules, such as health certificates for cheese and other fresh products”, he added.

Two sectors that have been particularly hard hit are agriculture and pharmaceuticals, where imports have dropped by 80% and 50% respectively. This has seen the UK drop down the ranks in terms of trade with the EU’s biggest economy. Before the UK voted to leave the EU in 2016, it was Germany’s fifth most important trading partner. But it came ninth last year and is now expected to fall another two places.

Despite this, the UK is still buying a lot from Germany, with imports up 2.6% to $32.1bn in the first six months of this year. Mr Schmidt said the new trade realities would have hit small UK companies more than German ones, as they were less accustomed to selling their goods outside the EU.

“For many small British firms, Brexit meant losing access to their most important export market,” he said. “It’s like shooting yourself in the foot. And this explains why German imports from Britain are in free fall now.”

Gabriel Felbermayr, president of the Kiel-based Institute for the World Economy, said: “The UK’s loss of importance in foreign trade is the logical consequence of Brexit. These are probably lasting effects.” The Department for International Trade did not immediately respond to the BBC’s request for comment.

Source: bbc.com