In an unexpected move, Christian Lindner, the German Finance Minister and leader of the German liberals, has extended an invitation to the United Kingdom to explore "new steps" in their post-Brexit trade relations with the European Union (EU). Lindner's gesture, made during a BBC interview, has raised the prospect of reducing trade barriers and addressing the challenges that have emerged in daily business life since Brexit.
During discussions at the IMF and World Bank's annual meetings in Marrakech, Lindner emphasized that the UK has a "standing invitation" to engage in talks aimed at mitigating trade barriers and addressing obstacles that have arisen in the wake of Brexit. He expressed concerns about the new challenges facing German corporations due to Brexit, highlighting that the UK has not necessarily benefited from the departure.
Lindner expressed his appreciation for the United Kingdom, its values, and its people, underscoring the desire to intensify trade relations once again. Notably, German goods exports to the UK dropped by 14.1% in 2022 compared to 2016, the year of the Brexit referendum. The UK, once Germany's third most important export partner, has now slipped to eighth place, and it is no longer among Germany's top 10 trade partners when considering trade in both directions.
One notable consequence of Brexit has been a significant reduction in car exports from the EU to the UK, resulting in a €10 billion (£8.6 billion) decline in value. Both German and British industries have voiced concerns about increased red tape, affecting not only goods exports but also worker travel.
An imminent trade barrier could involve the imposition of tariffs on the trade of certain electric vehicles that do not meet the criteria outlined in the post-Brexit Trade and Cooperation Agreement with the EU. When asked about resolving this issue, Mr. Lindner emphasized that the UK is now considered a third-party country, subject to customs declarations when trading with the EU, regardless of any trade agreement.
Lindner's invitation comes against the backdrop of a more cooperative relationship with the EU, particularly following the Windsor Agreement on Northern Ireland trade rules. Labour Party leader Sir Keir Starmer has been advocating for the renegotiation of the Brexit deal to make it more effective.
While a formal review of the post-Brexit deal is scheduled for 2026, Germany's offer suggests a willingness to expedite discussions. A spokesperson from the UK Foreign Office highlighted the UK-EU Trade and Cooperation Agreement as the world's largest zero-tariff, zero-quota free trade deal, emphasizing its importance in providing market access and opportunities for UK businesses globally.
Regarding the German economy, Lindner dismissed suggestions of weakness, stating that it has demonstrated resilience despite facing challenges such as a recession earlier this year due to rising gas prices and disruptions in Russian supplies following the Ukraine crisis. He noted that Germany has diversified its energy sources and bolstered its gas reserves, effectively addressing the issue of Russian gas imports.
