European jobs at risk should unregulated Brexit occur

12 February 2019

12 February 2019

Should the UK leave the European Union without a deal, up to 100,000 jobs could be affected in Germany – many within the automotive industry.

This is the finding of a study published by one of the country’s leading economic institutes, Halle IWH. Speaking to the newspaper Welt am Sonntag, the group said the most affected areas would be Volkswagen Group’s hometown of Wolfsburg, and Dingolfing-Landau, the site of BMW’s largest German factory.

′The employment effect of a hard Brexit would be felt above all in the automotive industry,’ Oliver Holtemoeller, one of the study’s authors, told the newspaper.

Because of Germany’s reliance on exports, no other country in the EU would be more affected, according to Holtemoeller. Should the UK leave on 29 March without a deal, World Trade Organisation (WTO) tariffs would apply to all goods entering and exiting the country. These would be set at around 10% according to current trading conditions.

Therefore, any decline in exports particularly affects the automotive industry. The greatest impact, measured by the number of employees, would be at VW’s Wolfsburg plant and at BMW’s factory in Lower Bavaria. The study reports that 500 workers could be affected in Wolfsburg and 265 at Dingolfing-Landau. In both cases, this would equal around 0.4% of the total workforce.

There are also fears concerning Stuttgart, where a total of 726 workers (0.3%) could be at risk. Daimler has a plant in the area, while technology companies IBM and Siemens are also based locally. There is a similar situation in the Märkischer Kreis area of southern Westphalia. Some medium-sized foreign businesses are located there and, according to calculations, 703 positions, or 0.3% of the workforce, are potentially threatened.

The study concentrated only on the imposition of tariffs and the effects on businesses due to the extra costs. Further risks, such as lack of investment, were not reflected in the figures.

After Germany, France is the EU country whose labour market is most threatened by an unregulated Brexit, with almost 50,000 workers affected, according to the study. In China, 59,000 jobs could be at risk, while in terms of percentage of the total population, Ireland and Malta would be the hardest hit. According to calculations, 612,000 people globally could lose their jobs.

The figures are the results of a simulation calculation: For the study, the authors assumed that Britain’s imports would collapse by 25% after a disorderly Brexit, a value that corresponds to current scientific estimates. They developed a formula that allowed them to calculate how such an import collapse would affect industries and countries. The basis for this was data from the World Input Output Database (WIOD), which documents the world trade interdependencies of countries.