Monday 16 October 2023

Brexit and German trade

The reported comments by the German Finance minister, Christian Linden, that Britain just needs to call if it wants a closer relationship with the EU has sent some Brexiteers into a tizzy. In particular, John Redwood was as dismissive as you might expect. There was no doubt an element of self-interest in Linden’s comments, after all, German exports to the UK are well down and that means the jobs of German workers are at risk.  He told the BBC: "In the daily life of German corporates, there are new obstacles since Brexit... I don't think [the] United Kingdom is benefiting from Brexit." You and I might think that was simply a statement of the obvious but apparently not.

This is Redwood's response:

This is like quitting the protection of a walled city and then demanding the city fathers dismantle the wall.

The BBC reported Linden saying: "We really appreciate the United Kingdom and its values, its people... and I would really, really appreciate it if we can intensify [the trade relationship] again." 

And, we learn that according to the German Chamber of Industry and Commerce, German goods exports to the UK were 14.1% less in 2022 than in 2016 - the year of the Brexit referendum. The UK has slipped from Germany's third most important export partner to eighth.  You can see where he's coming from.

The finance minister of the EU's largest economy is concerned about the loss of trade and therefore the impact on jobs, families, and the wider economy.  Contrast that with our government who seems to care not a jot about any of it because of ideology.

And lest you think it's only German exports that have been affected, the BBC also adds: "Combining trade both ways, the UK is no longer in the top 10 of German trade partners."

In other words, our exports to Germany have also dropped. On this subject, I noted a few days ago a tweet from Dennis Novy, a Professor of Economics at the University of Warwick, and a former adviser on international trade, macroeconomics, and finance, to the Treasury and the House of Lords.

It's fascinating because you can see German exports to Belgium (+35%), Netherlands (+25%) France (+10%) Italy (+25%) Spain (+18%) Poland (+37%) The Czech Republic (+21%), and Austria (+20%) are all well up on 2019 figures.

Meanwhile, exports to the UK are down 5%.

The same is true of imports into Germany.  Belgium (+21%), Netherlands (+8%) France (+6%) Italy (25%) Spain (13%) Poland (44%) Czech Republic (28%), and Austria (+24%) are all exporting more to German customers.

But from the UK they're down 1%. 

It’s not clear if the figures quoted are adjusted for inflation or at current prices. The original German statistics office says they are ‘seasonally and calendar adjusted’ but I’m not sure what that means. I suspect they are adjusted for inflation. But in a way, it doesn’t matter, because they’re all given on the same basis and are relative.

What is obvious is that there has been a resurgence in internal EU trade after the pandemic which Britain hasn't been able to share in. Brexit is the only factor that can be blamed. And it's not just internal trade with the other EU member states, trade with the US has also boomed:

All of this simply confirms what our own statisticians have been arguing for the past year or more, that our exports, far from reaching record levels have not actually recovered to the level of 2019, four years ago!

John Redwood then tweeted this:

This might make sense if the UK government was hacking back EU laws left, right and center but they aren't, as I posted about last week. They're struggling to find any EU laws (most of which we voted in favour of) to ditch despite years of looking.

So we are now in the bizarre position of following all or very nearly all of the EU acquis communitaire which men like Redwood say is damaging Britain, but without the benefit of frictionless trade that it was intended to deliver. 

Meanwhile, both internal and external EU trade is growing rapidly while ours stagnates.

We are starting to look like surly teenagers who know they've got things badly wrong but can't bring themselves to admit it.

Update:

This came in a few minutes ago from our old disinformation mate Gully Foyle:

You can see for yourselves his claim that Germany has see a significant drop in exports is just not true.

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