Nervous German Businesses Planning for Worst Case Scenario

Companies across Germany are getting more nervous and not just sitting idle waiting for Brexit, but are already preparing by looking for individual solutions and expensive work-arounds.

The clock is ticking and Brexit is only nine months away. With no clear exit deal on the horizon, the situation is looking ever more precarious. And as any MBA knows, uncertainty is not good for complex long term business projects, DW reported.

Firms within the UK and the European Union are getting nervous and making a broad range of contingency plans. But even making emergency plans—which may never be implemented—is costly. Yet there is the risk that these European problems could be overshadowed by the bigger challenges to global trade caused by the “America First” policy of Donald Trump.

As global manufacturing and export champions, German companies are fighting on many fronts. Paul Maeser, an expert for economic policy at the Federation of German Industries, told DW that businesses throughout Germany are planning for what they consider “the worst case” in which the UK leaves the bloc without a comprehensive trade and customs deal at all.

Among other measures companies are setting up new facilities, looking for other suppliers that operate within the single market and are hiring people in order to process goods through customs, according to Maeser.

They are even setting up new servers because they are uncertain about “whether the free flow of data is still possible with the UK and the EU”.

Doing business with a Britain that has crashed out of the EU is possible but tricky. Any trade or other future negotiations would have to walk a tightrope without jeopardizing the relationships between the 27 remaining EU members or other third countries.

Meanwhile, Germany’s labor market remained on a strong footing in June despite some softer economic data recently and concerns over the potential impact of global trade tensions.

Jobless claims in June fell by 15,000 from May, the federal employment agency said Friday, referring to data adjusted for seasonal swings. Economists polled by The Wall Street Journal had forecast a decline of 7,500.

Germany’s adjusted jobless rate, meanwhile, remained at 5.2%, unchanged from May, the lowest rate since the beginning of the data series in January 1992.

Demand for labor remained strong in June, with 805,000 vacancies reported at the federal employment agency, up by 74,000 on year.