BERLIN, Oct. 9 (Xinhua) -- German exports to Britain could fall by up to 57 percent as a result of British withdrawal from the European Union (EU), a study by the German Economic Institute (IW) showed on Tuesday.
If no free trade agreement was concluded between the EU and Britain by March 2019, exports from EU countries to the country would be charged with an average of 3.6 percent tariffs, the study found.
The EU, on the other hand, could impose customs duties of 2.8 percent on exports from that side. According to the IW study, exports from Germany to Britain would be burdened with an effective tariff rate of 4.3 percent.
In total, EU companies could face costs of over ten billion euros due to tariffs, while British companies would have to bear a good five billion euros in additional expenses. "This horror scenario should motivate politics to act constructively," said IW scientist Markos Jung.
German companies would have to pay customs duties of 3.3 billion euros (3.8 billion U.S. dollars). The German automotive industry would be particularly affected in this regard. With around 60 percent, the car manufacturers would account for the "lion's share" of Germany's additional costs, the study stated.
Speaking to Xinhua on Tuesday, Matthias Diermeier, economist at IW and co-author of the study said that "a final decision on a trade agreement will not be reached by the end of March at all. An interim solution based on the status quo is as likely as a hard Brexit scenario".
However, it is "very likely that in the long run a more modern free trade agreement will be established by the EU and the UK, similar to the CETA agreement between the EU and Canada," added Diermeier.
