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Nearly half of firms in Germany have made no Brexit preparations

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
German, British, and EU flags in front of the Reichstag in Berlin, Germany. Photo: Reuters/Fabrizio Bensch
German, British, and EU flags in front of the Reichstag in Berlin, Germany. Photo: Reuters/Fabrizio Bensch

A new survey released Thursday by KPMG and the British Chamber of Commerce in Germany revealed that 47% of companies in Germany have not yet conducted a Brexit risk assessment nor made preparations for Brexit as of the start of this year.

The German British Business Outlook 2019 surveyed 101 firms, which included both German companies with subsidiaries in the UK and UK subsidiaries in Germany. Germany is the UK’s second-largest trading partner — bilateral trade was €180bn (£156bn, $202bn) in 2017. Of the companies who have made Brexit preparations, around 60% have adapted their admin processes and over half have set up a special Brexit task force.

KPMG’s Andreas Glunz told journalists in Berlin on Thursday that companies were not able to get prepared for Brexit primarily because of the impossibility of knowing exactly how Brexit was going to play out. Companies considered a Brexit delay with a second referendum or a hard Brexit to be the most likely scenarios, according to the survey.

“When all scenarios seem possible, businesses cannot prepare for all of them simultaneously,” Glunz said. “That’s nigh on impossible, especially for small-to-medium sized entities.”

He pointed out that there was no clarity about what Britain’s EU exit deal might look like when the referendum first passed two years ago, and it was exactly the same two months ago. The main difference is that companies are now threatened with a “cliff edge” situation.

The survey found that 40% of business owners expect Brexit to have a big or very big negative effect on their businesses, and over half expect a moderate-to-small impact. KPMG pointed out that these statistics are pretty much the same as a year ago.

READ MORE: ‘A nightmare for companies’: President of British Chamber of Commerce in Germany discusses Brexit

The main areas where the firms expect to feel the pain from Brexit are in administrative burdens, as well as sales and services volumes. They also expect to see a negative impact from supply chain disruption, customs and trade costs, and exchange rates.

Other findings included that 84% of companies expect the British economy to decline. More than one-third of the respondents said they will revise their investment plans if it comes to a hard Brexit.