Union flags everywhere, at least until Brexit. Picture: BMW
Union flags everywhere, at least until Brexit. Picture: BMW

Frankfurt am Main — Leading German business organisations warned on Wednesday of a “chaotic” Brexit that would cause massive disruption to trade, after MPs in London overwhelmingly voted to reject an EU withdrawal deal.

“A chaotic Brexit is coming dangerously close,” Federation of German Industry (BDI) director Joachim Lang said in a statement, warning that more than €175bn of German-British exchanges in goods and services could be affected.

“The top priority must be to avoid a hard Brexit,” Lang added. “Responsibility for that lies solely with the government and the opposition in London.”

British Prime Minister Theresa May faces a no-confidence test in Westminster late on Wednesday after MPs rejected her hard-fought pact with Brussels by 432 to 202 votes.

Without a withdrawal agreement, Britain will abruptly tumble into “third-country status” after March 29 and face regulatory and tariff barriers to trade with the EU, rather than enjoying an almost two-year “transition period” when present rules will still apply.

For firms, “I believe it won’t be possible to prepare properly for the chaos”, Martin Wansleben, director of the Association of German Chambers of Commerce and Industry (DIHK) told public broadcaster SWR2. Wansleben pointed to the motor industry with its continent-spanning supply chains as a key sector that would be disrupted by Brexit.

British lawmakers defeated Theresa May’s Brexit divorce deal by a crushing margin on January 15 2019, triggering a new confidence vote and yet more political upheaval that could lead to a disorderly divorce or even a reversal of the 2016 decision to leave.

“If they no longer have the same rules as in Europe, if they must pay tariffs, then it’s increasingly unrealistic or no longer economically rational to produce for all of Europe in such a country,” he said.

Germany’s car industry is present in the UK with production sites such as BMW’s Mini plant in Oxford and two factories belonging to Vauxhall, a subsidiary of Peugeot-owned Opel.

“Without an orderly and workable solution for economic exchanges, jobs in the car industry are at risk, especially on the British side,” warned Bernhard Mattes, president of the VDA car makers’ federation.

Meanwhile, Federation of the German Chemical Industry (VCI) head Utz Tillmann predicted “damage far beyond our industry” if supply chains were disrupted, saying governments on both sides must agree “transitional solutions” to preserve the most essential trade even in case of no deal. “In particular, this is about supplies of medicines in the UK.”