In an unexpected turn of events, the Germany Finance Minister, Christian Lindner, has extended an invitation to the United Kingdom to explore “new steps” in their post-Brexit trade relationship with the European Union (EU). During an interview with the BBC, Lindner expressed a desire for closer trade ties and urged the UK to initiate discussions.
The UK, in response to this surprising gesture, has stated its openness to explore “new opportunities” on a global scale.
Lindner, who leads the Germany liberals, a part of the ruling coalition under Chancellor Olaf Scholz’s centre-left SPD, made this announcement during discussions on the sidelines of the IMF and World Bank’s annual meetings in Marrakech.
Lindner emphasized that the UK has a “standing invitation” for future talks, aimed at addressing and reducing trade barriers and obstacles encountered in daily business life. He acknowledged that Brexit had introduced new obstacles for Germany corporations, adversely affecting trade relations. According to Lindner, the UK’s trade with the EU was not benefiting as anticipated from Brexit.
Trade between Germany and the UK saw a significant decline, with German goods exports to the UK falling by 14.1% in 2022 compared to 2016, the year of the Brexit referendum. The UK has dropped from being the third most important export partner to the eighth. This situation has taken the UK out of the top 10 of German trade partners.
Furthermore, car exports from the EU to the UK have decreased by nearly half in terms of volume since Brexit, amounting to a €10 billion (£8.6 billion) reduction in value.
Both Germany and British industries have faced challenges associated with additional red tape, affecting goods exports and worker travel.
One of the pressing issues at hand is the potential imposition of tariffs on the trade of specific electric vehicles, which do not qualify for the post-Brexit Trade and Cooperation Agreement with the EU. This development poses concerns for German car manufacturers and the automotive industry.
When asked about the possibility of resolving this issue, Lindner noted that the UK is now considered a third-party country, operating outside the EU’s economic structures, which include the single market and the customs union. Businesses in third-party countries must complete customs declarations for imports and exports to the EU, regardless of whether a trade agreement is in place or not.
In response, Lindner mentioned, “If the United Kingdom decides on a special relationship with the European Union and our single market, you are invited. But currently, the United Kingdom has chosen its own path, resulting in these obstacles in daily life. I regret it.”
A decision regarding the imposition of tariffs is expected by the end of the year.
Lindner also held discussions with Chancellor Jeremy Hunt, his UK counterpart, while in Morocco.
These discussions focused on reducing post-Brexit red tape and can be seen as a sign of the improved relationship between the UK and the EU since the prime minister’s Windsor Agreement concerning Northern Ireland trade rules. The Labour Party leader, Sir Keir Starmer, has advocated renegotiating the Brexit deal to ensure its effectiveness, and the offer from Germany suggests an eagerness to expedite this process. While a scheduled review of the post-Brexit deal is due in 2026, Germany’s proactive stance implies a willingness to move forward more swiftly.
A spokesperson from the Foreign Office emphasized that the Trade and Cooperation Agreement is the world’s largest zero-tariff, zero-quota free trade deal, securing the UK’s market access across key service sectors and opening doors to new opportunities for UK businesses worldwide. The UK and the EU have both publicly committed to maximizing the potential of this agreement.
Shifting the focus to the German economy, Lindner refuted claims of its weakness. He emphasized that the German economy had proven its resilience despite entering a recession earlier this year due to the consequences of rising gas prices and the disruption of Russian supplies following the invasion of Ukraine. Germany’s proactive efforts to diversify its energy supplies and bolster its gas reserves have been instrumental in mitigating the challenges posed by Russian gas imports.
German Finance Minister Christian Lindner has extended an invitation to the UK for discussions on enhancing post-Brexit trade relations with the EU, emphasizing the need to address emerging trade barriers and issues. The UK has responded positively to exploring new global opportunities.
This offer comes in light of dwindling trade between Germany and the UK, with German exports falling by 14.1% in 2022 compared to 2016. Car exports from the EU to the UK have also significantly declined. Issues such as potential tariffs on certain electric vehicles pose challenges for trade. The invitation signals a willingness to expedite trade discussions and improve the UK-EU relationship.