Brexit “Fatal Signal” for German Chemicals
The UK quitting the EU would be a “fatal signal” for economic development in Europe and the chemical industry in particular, the German chemical industry association Verband der Chemischen Industrie (VCI) said, reacting to the latest poll that showed the “Leave” campaign gathering strength.
A British exit would mean a weakening of German chemical producers’ exports to the country and a decline in direct investment on both sides of the channel, said VCI President Marijn Dekkers, until recently CEO of Bayer. “We hope that a clear majority of British voters will want to remain in the EU, especially now that the economy in Europe is undergoing a timid recovery,” Dekkers added.
The UK is Germany’s sixth largest chemical-pharmaceutical trading partner, VCI figures show, receiving German exports worth €12.9 billion in 2015 (7.3% of the sector’s total), with specialty chemicals and pharmaceuticals accounting for the largest share. In the same year, German chemical companies imported goods valued at €5.6 billion euros from the UK, in the main pharmaceutical and petrochemical products.
Currently, 63 UK-based chemical companies with around 6,000 staff and sales of €4.1 billion are subsidiaries of German companies, with investments worth €1.6 billion in the country. By the reverse token, VCI calculates that British companies have invested “well over €2 billion in the German chemical industry.
Cutting to the emotional core, the German association said that from its perspective the most serious negative economic effects of a UK withdrawal would have to be borne by the British themselves. At the same time, the producers warned that the other 27 EU member states would suffer consequences in the form of reduced GDP and declining exports, with Germany forced to bear most of the brunt.
VCI pointed also to a “likely devaluation” of the pound sterling and a potential decision by German investors to “reconsider their commitment to Britain,” which could be flanked by a withdrawal of capital. The distortion of financial markets triggered by a Brexit “would be difficult to quantify,” it added.