Low economic growth
The Brexit uncertainty is also leading to low economic growth
,which could also make private consumers more reluctant to buy.
Supplier companies are even more affected relatively speak-
ing by the depreciation, since they face tougher price competi-
tion as a result of the negotiating power of the OEMs. This will
have an impact on both foreign and domestic sales. For not only
are their products becoming comparatively more expensive in
the UK, it is also becoming cheaper to import components
fromthere. Imports amounted to EUR 5. 9bn, or a proportion of
6. 1% last year.
A continuing low exchange rate with the pound
could lead to a steady decline in German exports, imports from
the UK could weigh on the domestic sales of German ( supplier)
companies, and direct investment might also be carried out in
locations in the Ukfor cost reasons.
However, depending on how the exit process is structured,
the impact of the reintroduction of trade barriers when the UK
actually leaves the EU could boost both direct investment as well
as divestment by companies in the UK.
EU Forecast
euf:ba18.c:24/nws-01