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15 February 2016

Bertelsmann Stiftung: British and German companies regard Brexit as a threat


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Four out of five business leaders in the UK and Germany have expressed their opposition to a withdrawal from the European Union. Nearly a third of UK and German businesses in the United Kingdom asked about a Brexit threatened to reduce or even relocate capacity in the UK.


If the withdrawal were to go ahead, the business leaders predict numerous negative effects for national labor markets as well as for revenues and investments within their own sectors and businesses. Those are the findings from a recent survey by the British Economist Intelligence Unit, carried out on behalf of the Bertelsmann Stiftung.

The findings also show that approximately 80 percent of the entrepreneurs, managing directors and executive employees surveyed want the United Kingdom to remain in the EU. In Germany, this figure is slightly higher than in the UK (83 versus 76 percent). The sectors in Britain most in favor of remaining in the EU are the manufacturing industry, IT and technology companies, and the retail and consumer goods industries, with over 80% of UK representatives in those sectors strongly expressing an opinion to stay. This clear result comes as a surprise, as it had been assumed that the Brexit represented a "best case scenario" for the British, since the United Kingdom would only leave the EU as a political entity while remaining a member of the internal market. This means the country would enjoy a status similar to that of Switzerland or Norway.

Yet business representatives surveyed on both sides of the Channel say they fear that this partial exit from the EU would give rise to significant adverse effects for the economy. For example, 42 percent of respondents foresee negative or even very negative consequences for their respective job markets, fears that are somewhat more pronounced in the UK than in Germany (44 versus 39 percent).

Respondents believe a Brexit would harm their own sector and enterprise

Business leaders in both countries are concerned about a number of negative effects for their own economic sectors, with 38 percent of respondents worrying about a negative impact on sales, and approximately one-third concerned about investment and employment. The results show that companies in the United Kingdom are more pessimistic about the situation than those in Germany.

Many respondents also see a Brexit as a real threat to their own companies. For example, approximately one-third believe sales will have declined within three years of the United Kingdom leaving the EU, and some 30 percent expect both a drop in investment and negative consequences for employees in their enterprises.

Most evident was the expectation that there would be an impact on corporate decision making, with almost one-third of all companies surveyed in both countries wanting to either reduce capacity in the UK or relocate elsewhere. These attitudes were most prevalent in the IT sector, at 41 percent, while one-third of financial institutions would take similar measures.

Europe's heads of government need to find compromises

For Aart De Geus, chairman and CEO of the Bertelsmann Stiftung, the survey is a clear endorsement for the UK remaining in the EU. "On the eve of the negotiations, business leaders on both sides of the English Channel are telling us that we all have much to lose in the case of a Brexit," De Geus said. "Fears for job losses and drops in prosperity are real threats."

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© Bertelsmann Stiftung


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