In a non-binding referendumon 23 June 2016, the British voted
for Brexit – the end of the UK’ s membership of the EU.
It will be some time before this becomes reality; in a first stage, under Article
50 of the EU Treaty, the UK is obliged to submit an application to
the European Council to withdraw from the EU. And the subse-
quent separation negotiations will last at least two years.
After withdrawal, the free transport of goods, services, capital and people
between the Ukand a then scaled down EU-27 will no longer apply.
The outcome of the negotiations for future relationships and the
economic consequences thus remains completely open. There is a
significant risk of higher administrative costs relating to trade (e. G.
Import regulations, customs clearance, separate authorisation) be-
tween the Ukand the newEU-27.
The uncertainty surrounding the
consequences of Brexit was felt in the financial markets immedi-
ately after the result of the referendum was announced. From a
competition perspective, German industry focused mainly on the
reaction of the British pound, which depreciated strongly against
The pound had already been weakening ahead of the ref-
erendumin response to the risk of Brexit. On referendum day the
pound was worth almost 8% less, at 0. 778 pounds per euro, than
in June 2015; in the days after the vote, the British currency depre-
ciated further by around 10%. In July it recovered slightly before
levelling off at around 0. 86 pound per euro.
The pound is therefore
good 10% weaker compared to the referendum day and 20% to
August 2016. The weak pound is positive for the price competi-
tiveness of companies manufacturing in the UK and disadvanta-
geous for German industry. An even weaker pound had an impact
on German industry in the years from 2009 to the beginning of
2012. At that time the proportion of German exports to the UK fell
from6. 7%(2008) to 6. 2%(2011) .