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Brexit Brexit and its economic impact

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The United Kingdom's withdrawal from the European Union ("Brexit") has already led to far-reaching economic structural changes and will continue to do so in the future. The future framework for economic relations between the United Kingdom and the European Union has now been laid down in the Comprehensive Trade and Cooperation Agreement (the “TCA”), which entered into force provisionally on 1 January 2021. Although the TCA avoided a "hard" Brexit, and trade in goods without customs duties and import restrictions will continue to be possible, economic players in all sectors face new challenges. The economic consequences for companies in Hamburg, however, have so far been moderate, which is due to intensive preparations conducted. 


Brexit and its economic impact

Expected and actual effects on the Hamburg economy

Traditionally, economic ties between the Hanseatic City of Hamburg and the United Kingdom have been close. The Hamburg economy is therefore affected by Brexit in a variety of ways.

According to data provided by the Office of Statistics North (Statistikamt Nord) (as of 22 February 2019), United Kingdom was Hamburg's third most important trading partner in 2018 in terms of exports and sixth in terms of imports. The United Kingdom is one of the Port of Hamburg's most important trading partners. In 2018, goods worth a total of around 4.2 billion euros were exported from Hamburg to the United Kingdom and goods worth around 2.3 billion euros were imported. The export volume increased by around 120 million euros compared to 2017, while the import volume decreased by around 150 million euros compared to the previous year.

According to the Hamburg Chamber of Commerce, around 1,000 Hamburg companies maintained business relations with the United Kingdom before Brexit. Around 200 of these companies maintained a permanent local presence with a branch office, via a joint venture, a representative office or a production facility in the United Kingdom. Conversely, around 70 British companies had a registered office in Hamburg. Almost all sectors are involved in business with the United Kingdom– from industry and banking to logistics and foreign trade. Companies from the United Kingdom have invested almost four billion euros in Hamburg, corresponding to around 13 percent of all foreign investment in Hamburg. Hamburg firms have invested over 7.5 billion euros in the UK (20 percent of Hamburg's foreign investment).

An expert report commissioned by the EU Committee of the Regions concluded that 17.5 percent of Hamburg's economic output in the manufacturing sector may potentially be affected by Brexit.

Even before 1 January 2021, there has been a slight decline in exports to the United Kingdom by Hamburg companies. The forms and certificates that now have to be completed to prove compliance with the rules on the origin of goods pose further trade barriers. This may cause difficulties for small and medium-sized enterprises (SMEs) that have previously only traded within the European Union and now have to build up additional expertise in trade with non-EU countries, for example in customs clearance.

There have not been any major disruptions so far, and prolonged traffic jams at the borders have not yet formed. The medium- and long-term consequences of Brexit are not yet fully foreseeable. The information situation at British customs and British companies seems to be problematic so far. Some difficulties arise in the logistics sector. There are also complications in some cases for companies that regularly cooperate with British employees.

Overall, Hamburg companies have so far reacted pragmatically to the new economic situation. It seems to have paid off that Hamburg has been preparing intensively and systematically for the Brexit for a long time.

Preparation of the economic players

Hamburg has prepared extensively and systematically for Brexit. In principle, every company was called upon to prepare for changes, especially in the area of trade in goods and depending on its future involvement in the United Kingdom, company size and industry. For example, companies were recommended to add appropriate clauses to contracts, analyse their supply chains and prepare contingency plans for Brexit. A survey conducted by the Association of North German Chambers of Commerce and Industry (IHK Nord) in 2020 on the level of preparedness of companies for Brexit essentially showed that just under half of the companies considered themselves "very well" or "rather well" prepared, but less than 10% "rather poorly" prepared.

In September, the Hamburg Chamber of Commerce also published the results of a survey on the state of preparation of Hamburg companies with business relations to the United Kingdom for Brexit: The majority of Hamburg’s companies with business relations to the United Kingdom felt well prepared for Brexit. It is particularly positive that this also applies to small and medium-sized enterprises. Information on this can be found on the website of the Hamburg Chamber of Commerce (in German language).

Auswirkungen des Brexit auf die Hamburger Wirtschaft Hinweis: „Sonstige Ausfuhren“ bezeichnet die Summe aller weiteren Warengruppen mit niedrigeren Volumina (≤ 3%).


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