KPMG Germany has produced a report on the impact for business of Brexit, 100 days after the end of the transition period.
The report 100 Days of Brexit – an interim conclusion was commissioned by KPMG Germany and the British Chamber of Commerce in Germany (BCCG) and surveyed 93 BCCG member organisations and other companies ‘with a German-British business relationship’ between 23 March and 12 April 2021. The three top areas of concern for businesses were additional administrative expenses, new and additional customs duties and charges, and the increased cost of moving freight.
24% of companies responding the survey considered that the post-Brexit tax regime in the UK was ‘somewhat likely’ to bring opportunities for business, in the hope of more favourable tax rates or a ‘more advantageous tax system’ in the UK in the future although, in contrast, 49% considered this either somewhat or extremely unlikely. The report also notes the March 2021 Budget decision to raise the UK main rate of corporation tax to 25% from April 2023.
The view of other potential benefits such as growth opportunities in the UK market and reduced regulatory burden in the UK was mixed. Michael Schmidt, president of the British Chamber of Commerce in Germany commented: ‘We expected that Brexit would lead to severe trade disruptions, however the current situation goes far beyond that. We are receiving more and more inquiries from British companies that would like to establish themselves in Germany in order to be able to maintain business relations with our country. At present, this is clearly the only option for the continuation of mutual – although initially declining – business relations’.
Andreas Glunz, managing partner for international business at KPMG Germany, painted a similarly bleak picture: ‘Already since the referendum in 2016, the trade volume between the UK and Germany has been in rapid decline. The implementation of Brexit has led to further sharp declines in revenue and earnings in the first 100 days. At the same time, the trend towards exchange of suppliers in the German-British corridor is continuing, which is likely to lead to further declines in trade.’
The report suggests that exports from the UK to Germany have been hit significantly, with 77% of respondents reporting difficulties in moving goods. 72% of companies also reported challenges moving goods in the other direction. Services sectors are also heavily affected, with 60 % of companies reporting difficulties with employee secondments (and half of those finding secondments a ‘major challenge’).
The report notes the extra customs administration required for movements of goods between Germany and the UK – for example, customs declarations, supplier declarations, health certificates for food products, and proofs of origin – particularly where evidence is required to substantiate zero-tariff imports into the UK. New border controls have already led to logistical challenges for businesses, with longer transport times and extra storage requirements in some cases (particularly for essential supply chains). The report notes that price increases to cover the extra costs will risk disrupting supply chains, as businesses find themselves in a less competitive position compared to local suppliers.
KPMG Germany has produced a report on the impact for business of Brexit, 100 days after the end of the transition period.
The report 100 Days of Brexit – an interim conclusion was commissioned by KPMG Germany and the British Chamber of Commerce in Germany (BCCG) and surveyed 93 BCCG member organisations and other companies ‘with a German-British business relationship’ between 23 March and 12 April 2021. The three top areas of concern for businesses were additional administrative expenses, new and additional customs duties and charges, and the increased cost of moving freight.
24% of companies responding the survey considered that the post-Brexit tax regime in the UK was ‘somewhat likely’ to bring opportunities for business, in the hope of more favourable tax rates or a ‘more advantageous tax system’ in the UK in the future although, in contrast, 49% considered this either somewhat or extremely unlikely. The report also notes the March 2021 Budget decision to raise the UK main rate of corporation tax to 25% from April 2023.
The view of other potential benefits such as growth opportunities in the UK market and reduced regulatory burden in the UK was mixed. Michael Schmidt, president of the British Chamber of Commerce in Germany commented: ‘We expected that Brexit would lead to severe trade disruptions, however the current situation goes far beyond that. We are receiving more and more inquiries from British companies that would like to establish themselves in Germany in order to be able to maintain business relations with our country. At present, this is clearly the only option for the continuation of mutual – although initially declining – business relations’.
Andreas Glunz, managing partner for international business at KPMG Germany, painted a similarly bleak picture: ‘Already since the referendum in 2016, the trade volume between the UK and Germany has been in rapid decline. The implementation of Brexit has led to further sharp declines in revenue and earnings in the first 100 days. At the same time, the trend towards exchange of suppliers in the German-British corridor is continuing, which is likely to lead to further declines in trade.’
The report suggests that exports from the UK to Germany have been hit significantly, with 77% of respondents reporting difficulties in moving goods. 72% of companies also reported challenges moving goods in the other direction. Services sectors are also heavily affected, with 60 % of companies reporting difficulties with employee secondments (and half of those finding secondments a ‘major challenge’).
The report notes the extra customs administration required for movements of goods between Germany and the UK – for example, customs declarations, supplier declarations, health certificates for food products, and proofs of origin – particularly where evidence is required to substantiate zero-tariff imports into the UK. New border controls have already led to logistical challenges for businesses, with longer transport times and extra storage requirements in some cases (particularly for essential supply chains). The report notes that price increases to cover the extra costs will risk disrupting supply chains, as businesses find themselves in a less competitive position compared to local suppliers.
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