Brexit dominates German British Business Outlook (GBBO)
by David Fleschen
Brexit is not only overshadowing the news and companies’ strategic plans these days, but it is also a dominant topic in this year’s German British Business Outlook (GBBO). Only weeks before the exit date of 29 March 2019, almost half of the companies that took part in the survey still have not prepared their business for Brexit, since a wide range of scenarios are possible.
Forty percent of companies expect Brexit to have a big or very big impact. Roughly half of the surveyed companies predict new administrative burdens, as well as decreasing sales and service volumes after Brexit. Further, roughly one quarter foresee rising customs and trade expenses and disruptions in their supply chain. Most will react by revising investment and recruitment plans and moving businesses to continental Europe.As a consequence, a significant 84% of survey respondents see the British economy declining in 2019, 47% of which expect a strong decline.
In terms of their own business, 36% of companies surveyed are seeing a decrease in the current business year, while 47% of companies still expect their business to grow. The main reason for investing in the UK remains customer demand for the goods and services. Another reason, which has been on the rise since last year, is the availability of skilled workers. The 24% of respondents that do undertake R&D in the UK do so in close cooperation with universities and large tech companies. Twenty-five percent of the companies surveyed believe that favourable tax provisions in the UK Taxation (Cross-border Trade) Act 2018 will have a positive influence on their business, whereas 46% of respondents are not aware that the UK administration has any favourable impact.
The main strategies for 2019 among the companies surveyed comprise the focus on existing core competencies, diversification of the business and expansion into new regions. Meanwhile, the challenges linked to data protection and security are also requiring companies to take action.German businesses in the UK play an important role in the market – as a growth driver for a wide range of industries, ranging from automotive to pharmaceutical. German companies also employ around 412,000 people and invest roughly €118 billion directly in the UK. The UK and continental Europe will certainly remain strong partners after the UK has left the European Union, not only in terms of trade.
Source: British Chamber of Commerce in Germany, Photo: Fotolia