Brexit and its consequences in the time of Covid 19 - what can German companies expect?

Negotiations on the conditions for Britain's withdrawal from the EU are now entering their final phase. The result will have a considerable impact on all areas of economic transactions between the EU states and the British Isles. Politicians still insist on firm positions in their public statements. But those most affected - companies with business relations with the island – insist on flexibility. As an experienced commercial law firm, we advise our clients comprehensively on all issues related to the consequences of the brexit.

A British politician has compared Brexit to a moving into a new house: It causes expenses, but one gains a new view. It was sarcastically added in a commentary: But you sit smaller. However: As good lawyers for our clients, we know all too well about lengthy negotiations that only lead to an agreement at the last minute. Therefore, we can assess the current situation quite well from our own experience. 

What is at stake for German companies? First and foremost, the trade restrictions on the free movement of goods and services are affected. However, free trade also requires equal competition conditions, especially with regard to aid, social and environmental standards. This topic is summarized by the term 'level playing field'. It covers a very wide range of criteria relevant to competitiveness.

In addition to fishing rights, which are not so relevant here, it is particularly important how obligations under a future free trade agreement between the EU and the UK can be enforced. The question of the extent to which the British side is willing to allow interferences on national sovereignty is also relevant in this respect.

From the perspective of German companies, the decisive factor is whether an agreement can be concluded. Otherwise, customs duties and border controls will be applied overnight in relation between previous EU partners according to the rules of the WTO (World Trade Organization). This consequence affects companies on the continent and in the UK equally. The 27 remaining EU states are destinations for half of the exports from th UK. The UK is therefore relatively much more affected than the EU countries. And without agreement, the free movement of services would also be fundamentally affected. From the British point of view, this affects financial services in particular. At this point, London is the world leader.

The prospects for a last-minute agreement are therefore rather high despite the negotiating partners' insistence on fundamental positions. This result would be a win-win situation for all parties involved.