German firms to face major disruption after Brexit-industry group

[BERLIN] German companies with business in Britain will face major disruption starting in 2019, the year in which the country is expected to officially leave the European Union, Germany's BDI industry group said on Tuesday.

Uncertainty about the nature of ties Britain will have with the remaining 27 members of the bloc are a major concern for companies with operations on both sides of the English Channel.

Their concerns include how to make their operations comply with two different jurisdictions after decades of operating under single rules.

Britain will by the end of March trigger formal divorce talks with the EU that should be concluded within two years.

"German companies with operations in the United Kingdom face massive challenges starting in 2019," BDI managing director Markus Kerber said.

"Issues include customs duties, protectionist measures, diverging rules, lack of market access and tax dislocation."

Trade in goods and services between Germany and Britain stood at 175 billion euros (S$264.547 billion) in 2015. More than 2,200 German companies operate in Britain, employing 370,000 people.

British Prime Minister Theresa May has promised to seek the greatest possible access to European markets and to establish free trade deals with countries far beyond Europe. She also wants to impose limits on immigration from the continent.

The remaining 27 members of the EU have said Britain can not have access to the single market if it does not accept the principle of freedom of movement within the bloc.

"Ideally, we would have a deep and comprehensive partnership agreement on investment and trade," Mr Kerber said, which would be one way of containing the fallout.

REUTERS