Private and public consumption in Germany remains the
most important supporting factor for the economy thanks to
buoyant labour market conditions and high levels of spend-
ing associated with the refugee crisis. Conversely, higher
wages are expected to maintain pressure on margins and to
slowgrowth in investment in equipment.
• Production in the manufacturing sector in Germany should
keep pace with the global economy and grow modestly in
2016 and 2017. Weaker British demand after the Brexit deci-
sion will dampen exports to the UK, particularly of capital
goods. The weakness of the pound versus the euro will inten-
sify the competition with British manufacturers. Direct Ger-
man investment in the Ukis also expected to slow.
• The United Kingdom is an important export market for both
the food industry and beverage producers . This is particu-
larly the case since UK exports of food and animal feed have
grown much more strongly in recent years than overall sector
exports. Provided the exit negotiations do not result in the
loss of any trademark rights, the food industry is likely to be
relatively unaffected by Brexit.