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German Firms Scaling Back Investment in Britain Ahead of EU Vote | ASHARQ AL-AWSAT English Archive 2005 -2017
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City workers cross the Millennium footbridge in the financial district of London, Britain January 7, 2016. REUTERS/Toby Melville

BERLIN – German companies are considered among the major biggest foreign investors in the Britain, with 2,500 subsidiaries embracing around 500,000 British employees in different sectors; according to German Industry UK.

Today, German firms are scaling back their investment in Britain ahead of its European Union membership on June 23. With crystal clear warning that a “Brexit” might probably take place in both countries’ economies, which means hesitation for German companies doing business in Britain, according to Markus Kerber, managing director of the BDI Federation of German Industries.

Following a sharp annual decline of more than 40 percent in 2015, German foreign direct investment to Britain fell by 6 percent in the very first three months of 2016. Kerber stated that the majority of firms are taking action in regard of this by either delaying or reducing their investment.

The latter also expressed the worrisome of German companies and investors ahead of the British referendum stressing that a Brexit would lead to economic risks in both countries, as a result of severe legal uncertainties for 2 years, as a minimum.

While German firms generally decline to comment in detail on their investment plans in Britain, there are signs that managers are becoming increasingly worried ahead of Britain’s referendum. “From our point of view, it would be advantageous, particularly in terms of wealth and employment if Britain was to stay in the EU,” a Siemens spokesman said. He added, if Britain should leave the EU, Siemens would not terminate its business activities there.

Similar to many other British-based German companies, Siemens sent a letter to its 14,000 British employees last month, warning of the risks the firm would face if Britain voted to leave. One of these companies was BMW.

While a Brexit would not only affect the British economy, a study by DZ Bank showed it could also cost Germany up to 45 billion euros by the end of 2017 as exports from Europe’s economic power house would likely be hit, at a time of already waning demand from emerging markets like China.

In 2015, German companies exported goods worth some 89 billion euros to Britain, making the UK their third-most important export destination. At the same time, Germany imported British goods worth some 38 billion euros, leaving a trade surplus of around 51 billion euros.

With a total trade volume of 127.5 billion euros, Britain is Germany’s fifth-biggest trading partner behind the United States, France, the Netherlands and China. For the UK, Germany is the most important trade partner, ahead of the United States.