The Student Room Group

Would Germany go bust if the UK pulled out of the EU?

We know that Euro is basically held up by German cash and loans.
However if the UK left the Europe the stay camp suggest TRADE would stop.
This would potentially destroy the German economy. At a stroke they would stop zillions of VWs and BMWs coming here. The EU could go belly up.

http://www.ft.com/cms/s/0/f6cda050-20bb-11e5-aa5a-398b2169cf79.html#axzz4AIt2ZR2q

The trade is is £155 BILLION
http://www.telegraph.co.uk/finance/newsbysector/industry/9816643/Britain-becomes-Germanys-biggest-trade-partner-as-Berlin-London-pact-deepens.html

Or would it be like the Brexit suggest, trade will carry on as before with little or no change?
(edited 7 years ago)

Scroll to see replies

Reply 1
Trade would continue, only with a bit less regulations
Reply 2
Original post by Listers
Trade would continue, only with a bit less regulations


I believe even with more regulations.
Reply 3
Original post by JCampos
I believe even with more regulations.


So you believe Germany would not go bust but it will be severely damaged by new regulations (the UK is Germanys biggest trade partner and of course biggest export market).

What number of Germanys do you think will end up being unemployed by us leaving?
Nope.

The fundamental principle of the 'Leave' campaign's argument that the EU needs us more than the UK needs us is that we run an £80m trade deficit with the European Union. This is true, but it is not the entire picture.

The EU makes up about 45% of the UK's exports - a percentage which the 'Leave' campaign is right to emphasise as a declining percentage, but nonetheless it still makes the EU by far the largest importer of the UK's goods. On the other hand, the UK makes up just 7% of the rest of the EU's exports. Therefore, if a 'Leave' vote would threaten the ease of trade movement through leaving the Single Market (as is quite likely), 1 in 2 UK goods could no longer be able to sell to their previous consumers - compared to about 1 in 20 EU goods.

The entity that comes out worse off is evidently the UK and not the EU: they are much more important to us than we are important to them. Both would inevitably suffer, but the UK would do so far more.

What about Germany? In 2015, the UK was Germany's third-largest trading partner - £68bn of German goods were exported to the UK in 2015. The UK, on the other hand, exported £29bn to Germany (source). By these numbers, Germany would suffer more than the UK - but this forgets the fact that Germany's economy relies on the UK's economy much less than the UK's economy relies on Germany. In rank order, the UK is the 9th largest exporter to Germany after countries like China (1st), the United States (4th) and Poland (6th).

However, the UK exports more to Germany than it does to any other country - and unlike Germany, it hasn't built up such great trade relations outside of the European Union (this is a failing of national government and not the European Union, seeing as Germany is subject to as many EU trade regulations as we are). There is an argument, therefore, that the UK would suffer more than Germany because it would lose a greater percentage of its exports even though Germany could lose up to £39bn in trade relations.

Either way, Germany wouldn't go "bust". There would be negative economic impacts on both sides, but a 'Remain' campaigner would argue probably more so on the UK's side: the German economy is well-fitted to change exporter away from the UK because the UK isn't as important an exporter as other countries are to Germany, but the UK's economy - on the other hand - is far more reliant on Germany and on trading within the European Union.
(edited 7 years ago)
To clarify, the 'Remain' campaign is not arguing that all trade will stop with the EU in the event of a 'Brexit', as the OP implies. However, changing regulations and uncertainty about what exactly 'Brexit' is means that trade could be less easily facilitated and subject to new EU tariffs, which would ultimately reduce the amount of trade.

If we were to remain in the Single Market, the impact would not be as great as if we were to leave it completely, and may in fact be almost negligible. Most of the companies and businesses arguing that they would leave the UK in event of a 'Brexit' do so because they assume that 'Brexit' means leaving the Single Market - but the 'Leave' campaign can't clarify whether this is what they mean by 'Brexit'. Many American and Swiss banks, for example, have headquarters in London because this enables them to have access to the Single Market, and have been warning that they would relocate if this access was threatened. If 'Brexit' meant staying in the Single Market, they would not relocate.

Except, of course, that staying in the Single Market means you still have to sign up to the EU's regulations and policies and still pay the EU, but you just don't get a say over the regulations - so it's "no say, still pay".
(edited 7 years ago)
Original post by FredOrJohn
So you believe Germany would not go bust but it will be severely damaged by new regulations (the UK is Germanys biggest trade partner and of course biggest export market).

What number of Germanys do you think will end up being unemployed by us leaving?


This is a lie. The UK is neither Germany's biggest trade partner nor its biggest export market.

Germany's biggest trade partner is the United States (in terms of turnover) and its biggest export market is also the United States (in terms of euros). Full data tables, again, available here.

How many Germans would go unemployed? It's difficult to say. It depends on what 'Brexit' is - and because the 'Leave' campaign has different views on this, we don't know. See my posts above for full considerations though: it could range from, say, 10,000 Germans to 500,000 Germans (I have no economic qualifications - these are phoney numbers based on predictions for the UK). The German economy is much better adapted to change exporter away from the UK than the UK's economy is adapted to change exporter away from Germany.
(edited 7 years ago)
germany will be fine. in the event of a leave frankfurt will have a real shot of becoming europe's biggest financial hub.

BMWs and VWs and Audi are loved by the british public and have cars that can appeal to all different categories of brits. rich people love german cars, so i dont see them being easily substituted. Ford could get more sales but once again potential issues with US trade deals could lead to price increase. France will also side with germany in punishing britain for leaving EU and may not be co-operative on good trade deals with cars.

Remember cars have a shelf life so there will need to be consistent purchasing from germany of new cars unless you can convince brits to buy high end substitutes

This wouldnt be such a problem if britain didnt sell off its car industry but alas....

vote remain
(edited 7 years ago)
Original post by Southwestern
Nope.

The fundamental principle of the 'Leave' campaign's argument that the EU needs us more than the UK needs us is that we run an £80m trade deficit with the European Union. This is true, but it is not the entire picture.

The EU makes up about 45% of the UK's exports - a percentage which the 'Leave' campaign is right to emphasise as a declining percentage, but nonetheless it still makes the EU by far the largest importer of the UK's goods. On the other hand, the UK makes up just 7% of the rest of the EU's exports. Therefore, if a 'Leave' vote would threaten the ease of trade movement through leaving the Single Market (as is quite likely), 1 in 2 UK goods could no longer be able to sell to their previous consumers - compared to about 1 in 20 EU goods.

The entity that comes out worse off is evidently the UK and not the EU: they are much more important to us than we are important to them. Both would inevitably suffer, but the UK would do so far more.

What about Germany? In 2015, the UK was Germany's third-largest trading partner - £68bn of German goods were exported to the UK in 2015. The UK, on the other hand, exported £29bn to Germany (source). By these numbers, Germany would suffer more than the UK - but this forgets the fact that Germany's economy relies on the UK's economy much less than the UK's economy relies on Germany. In rank order, the UK is the 9th largest exporter to Germany after countries like China (1st), the United States (4th) and Poland (6th).

However, the UK exports more to Germany than it does to any other country - and unlike Germany, it hasn't built up such great trade relations outside of the European Union (this is a failing of national government and not the European Union, seeing as Germany is subject to as many EU trade regulations as we are). There is an argument, therefore, that the UK would suffer more than Germany because it would lose a greater percentage of its exports even though Germany could lose up to £39bn in trade relations.

Either way, Germany wouldn't go "bust". There would be negative economic impacts on both sides, but a 'Remain' campaigner would argue probably more so on the UK's side: the German economy is well-fitted to change exporter away from the UK because the UK isn't as important an exporter as other countries are to Germany, but the UK's economy - on the other hand - is far more reliant on Germany and on trading within the European Union.


It's the other way round- Germany would suffer more. Trade with the UK makes up a far higher percentage of Germany's GDP than the other way round. The UK economy is resilient to fluctuations in our exports because relative to the other major economic powers we export bugger all. Germany are also trying to buy the London Stock Exchange, so clearly they're not that worried about Brexit. Germany wouldn't go bust, but that's only because the Remain Campaign are mongering a pack of lies. Germany would not allow the EU engage in a trade war with the UK if we left.
Original post by FredOrJohn

However if the UK left the Europe the stay camp suggest TRADE would stop.
This would potentially destroy the German economy. At a stroke they would stop zillions of VWs and BMWs coming here. The EU could go belly up.



No they don't. Find me any credible source that says that.
You always rely on your own lack of understanding to pedal these fantasies of yours.

The other claim about export markets is a lie as is the one about imports. You always do this sort of stuff OP.

What will happen is that trade will suffer from the economic shock of no longer being in the EU. It will mean trade becomes more expensive and thereby reduce in the short term at least. I havent seen anyone object to that idea, because its basic economics.

As has been pointed out the rest of the EU are better placed to absorb that shock and will be less affected as a remaining 450m people than will the UK as 64m people.

The medium and longer term is more disputed.
(edited 7 years ago)
No
Reply 11
Original post by FredOrJohn
So you believe Germany would not go bust but it will be severely damaged by new regulations (the UK is Germanys biggest trade partner and of course biggest export market).

What number of Germanys do you think will end up being unemployed by us leaving?


Stop lying.

The UK is Germany's 3rd largest export country but not even top 5 in imports...
Reply 12
I very much doubt it
Original post by FredOrJohn
We know that Euro is basically held up by German cash and loans.
However if the UK left the Europe the stay camp suggest TRADE would stop.
This would potentially destroy the German economy. At a stroke they would stop zillions of VWs and BMWs coming here. The EU could go belly up.

http://www.ft.com/cms/s/0/f6cda050-20bb-11e5-aa5a-398b2169cf79.html#axzz4AIt2ZR2q

The trade is is £155 BILLION
http://www.telegraph.co.uk/finance/newsbysector/industry/9816643/Britain-becomes-Germanys-biggest-trade-partner-as-Berlin-London-pact-deepens.html

Or would it be like the Brexit suggest, trade will carry on as before with little or no change?



Like you say, Germany relies heavily on us financially so would be eager to sign a new trade deal that works for both of us (considering the government has upcoming elections and under pressure from the car industry)
Reply 14
Lol at believing it would affect the EU more than it would affect the UK :rolleyes:
Original post by james813
Like you say, Germany relies heavily on us financially so would be eager to sign a new trade deal that works for both of us (considering the government has upcoming elections and under pressure from the car industry)


Ofc they will have a trade deal, but it will be more expensive to conduct business and the UK will have to decie whether it wnats access to the signle market or not. If it does , then it will have to accept free movement of people.
Reply 16
I doubt the Germans will lose any sleep if Britian left.

If there was reduced trade in German cars to Britain, the Germans would lobby the EU to increase tariffs on British cars exported to the EU so gives a bigger market for German cars in the EU.

I think the most likely scenario is the EU will give inducements to firms located in the UK to move to the EU and also barriers such as restrictions on work visas to further encourage moves to the EU.
Original post by Maker
I doubt the Germans will lose any sleep if Britian left.

If there was reduced trade in German cars to Britain, the Germans would lobby the EU to increase tariffs on British cars exported to the EU so gives a bigger market for German cars in the EU.

I think the most likely scenario is the EU will give inducements to firms located in the UK to move to the EU and also barriers such as restrictions on work visas to further encourage moves to the EU.


Ofc they will because they lose one of the major net contributors, their trade also suffers and they are worried about contagion.

If they went the tariff way then that would be a trade war and everyone would lose further.

Lots of people and firms will move to the EU anyway because it will make more sense to be inside the single market. 450m v 64m.
Reply 18
Original post by 999tigger
Ofc they will because they lose one of the major net contributors, their trade also suffers and they are worried about contagion.

If they went the tariff way then that would be a trade war and everyone would lose further.

Lots of people and firms will move to the EU anyway because it will make more sense to be inside the single market. 450m v 64m.


The EU has to put tariffs on UK goods, otherwise, it makes a nonsense of all the other trade agreements with non EU trading partners. Even the US has tariffs, although low ones and its a much bigger market than the UK.

UK firms will just have to deal with tariffs and other trade issues if it wants to do business with the EU.

Even with low tariffs, there will be barriers and increased costs to trade like customs inspections, more paperwork and delays in getting goods to the customer which would mean its less easy and more expensive for EU companies to do business with UK businesses and vice versa.

EU based businesses will no doubt say to other EU based businesses why do business with the UK and suffer increased costs, more paperwork and delays when you can do business with another EU based business and not have to put up with all those problems.
(edited 7 years ago)
Original post by Maker
The EU has to put tariffs on UK goods, otherwise, it makes a nonsense of all the other trade agreements with non EU trading partners. Even the US has tariffs, although low ones and its a much bigger market than the UK.

UK firms will just have to deal with tariffs and other trade issues if it wants to do business with the EU.


It may and it may not. Anything that one side does will result in retaliation by the other side. It depends what deal they negotiate.

Your second point is stating the obvious? The impact will mean there will eb a further level of uncertainty and cost to conducting business.
(edited 7 years ago)

Quick Reply