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No-deal Brexit could cost Germany 100,000 jobs, according to study

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No-deal Brexit could cost Germany 100,000 jobs, according to study
The BMW plant in Dingolfing, Bavaria. Photo: DPA
08:48 CET+01:00
A no-deal Brexit could cost more than 100,000 jobs in Germany, hitting the auto and technology industries worst.

That’s according to a new study by an economic research centre, which found Germany would be the worst hit EU country when it comes to jobs in the event that the UK leaves the EU without a withdrawal agreement in place.

The research, conducted by the Leibniz Institute for Economic Research Halle (IWH) and the Martin Luther University Halle-Wittenberg, looked at the effect of a hard Brexit on different parts of Germany, and showed the automobile and technology industries would bear the brunt.

SEE ALSO: Brexit planning: What you need to know about Germany's plans for a no-deal

SEE ALSO: 'Horror Scenario': How Brexit could affect Germany

"In no other country is the effect on total employment as great as in Germany," one of the authors of the study, Oliver Holtemöller, told the newspaper Welt am Sonntag.

The study came as fears continue to grow over the outcome of Brexit. The UK is still scheduled to leave the bloc on March 29th, but there is currently no deal in place.

Business leaders in Germany have long been warning of the consequences of the UK leaving with no withdrawal agreement in place, saying it could cause huge disruption to trade.

SEE ALSO: German business warns of Brexit 'chaos'

Nonetheless, the financial capital Frankfurt has seen positive effects in the run up to Brexit, as several companies have relocated there or plan to in future.

On Sunday, a spokeswoman for the British government confirmed to DPA that Prime Minister Theresa May wanted to ask the parliament in London for more time for renegotiations with the EU. A vote on how to move forward is now scheduled for February 27th.

Car industry would be worst hit

After a so-called unregulated or disorderly Brexit, customs duties would be levied on imports to the UK. The  study captured how a resulting slump in exports would affect the job market in Europe. Further Brexit dangers for the labour market, such as unwillingness to invest, were not taken into account in the figures.

SEE ALSO: Frankfurt confident it is the big Brexit relocation winner: Special report

The researchers believe the states in most danger in the event of a no-deal are Baden-Württemberg, Bavaria and North Rhine-Westphalia, where car companies such as Audi, BMW, VW and Mercedes are based. States in eastern Germany, on the other hand, would not face the same high risks.

The car industry would be hit the hardest by a decline in exports, the study found. Measured in terms of the total number of employees, the greatest effects would be felt at VW's Wolfsburg location and at BMW's Dingolfing-Landau location in Lower Bavaria.

SEE ALSO: Germany softens firing rules to lure banks fleeing Brexit

For Wolfsburg, research showed that 500 employees were potentially affected, for Dingolfing-Landau it was 265. In both cases this amounts to about 0.4 percent of the total workforce.

Many employees (726 or about 0.3 percent) would also have to fear for their jobs in the Böblingen district near Stuttgart. Technology companies such as IBM and Siemens are located there, and Daimler also has a plant.

The situation is similar in Märkischer Kreis in southern Westphalia, where many medium-sized companies with foreign business are located – according to the study, 703 jobs or 0.3 percent of employees are potentially threatened here.

Over 600,000 jobs worldwide

The study showed that 612,000 people worldwide could lose their jobs after a no-deal Brexit. In France almost 50,000 workers would be affected, according to researchers' calculations, while in China it's 59,000.

In the study the authors assumed that British imports would collapse by 25 percent after a no-deal Brexit – a value that corresponds to to current estimates. They developed a formula that allowed them to calculate how such an import slump would affect which industry and which country. This was based on data from the World Input Output Database (WIOD).

Other Brexit news, on the other hand, should give hope to workers in the EU. The Dutch Ministry of Economic Affairs announced on Saturday that 42 British companies had moved to the Netherlands since 2018. According to their statement, €291 million has been invested in the move and some 2000 jobs have been created.

 
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