| 22.1°C Belfast

German business bosses warn Theresa May over Brexit deal


German business leaders said their Brexit priority was maintaining the integrity of the single market for the 27 remaining members of the EU

German business leaders said their Brexit priority was maintaining the integrity of the single market for the 27 remaining members of the EU

German business leaders said their Brexit priority was maintaining the integrity of the single market for the 27 remaining members of the EU

German business leaders have cast doubt on ministers' claims that the country's manufacturers will help secure a Brexit trade deal, instead warning Theresa May it will be "extraordinarily difficult" to protect UK industry.

Ministers have frequently claimed that German carmakers, along with other key European industries such as French farmers and winemakers, would lobby their governments to agree a comprehensive deal which maintains tariff-free trade between the UK and the other 27 EU member states.

But the leaders of two of Germany's main business organisation said the priority for them was maintaining the integrity of the single market for the 27 remaining members of the European Union.

Dieter Kempf, president of the BDI, the federation of German industries, told the Observer: "Defending the single market, a key European project, must be the priority for the European Union. Europe must maintain the integrity of the single market and its four freedoms: goods, capital, services, and labour.

"It is the responsibility of the British Government to limit the damage on both sides of the Channel. Over the coming months, it will be extraordinarily difficult to avert negative effects on British businesses in particular."

Ingo Kramer, president of the confederation of German employers' associations (BDA), told the newspaper: "The single market is one of the major assets of the EU. Access to the single market requires the acceptance of all four single market freedoms.

"The UK will remain a very important partner for us, but we need a fair deal for both sides respecting this principle. The cohesion of the remaining 27 EU member states has highest priority."

Weekly Business Digest

Margaret Canning’s selection of the must-read business stories straight to your inbox every Tuesday morning

This field is required

Their intervention comes after the Prime Minister received a boost at the G20 summit, with US President Donald Trump highlighting the prospect of a trade deal with the UK.

Mrs May said it was a "powerful vote of confidence" in Britain that Mr Trump and other world leaders have shown with their "strong desire" to strike new trade deals after Brexit.

The Prime Minister said she is "optimistic and positive" about a future pact with the US after the president said he believed an agreement could be reached "very, very quickly".

Following talks on the margins of the summit in Hamburg, Mr Trump hailed the "very special relationship" he had developed with the PM.

He said he expected an agreement on new trading arrangements with Britain to be "very powerful".

Mrs May insisted she was confident the UK would also secure a good deal with the EU "because it's not just about what's in the interests of the United Kingdom, it's about what's in the interests of the remaining 27 members states in the European Union and I think it is in the interests of both sides to have that good trade agreement".

She added: "But I'm also optimistic about the opportunities that we will see in the rest of the world.

"Some of the countries I have been talking to here who have shown great interest in working with us on trade arrangements in the future, the United States, Japan, China, India, these are all huge world economies.

"This is an important development for the United Kingdom and I look forward to developing those trade deals as well."

In a sign of the difficulties Mrs May will face in Parliament getting her Brexit legislation through, three Tory former ministers hit out at her approach.

Former attorney general Dominic Grieve and ex-education secretary Nicky Morgan attacked the red line Mrs May has put on allowing any role for the European Court of Justice (ECJ) after Brexit.

Mr Grieve told the Sunday Telegraph the Government should have an open mind on the issue: "We have to be realistic. Some of the attitudes to the ECJ seem to be a bit knee jerk. It has a pariah status.

"I've never been particularly impressed with it, but the fact is it is there and it's going to be doing a lot of work that is relevant to us."

Ms Morgan said: "There may be some merit in just thinking about the detail of our future relationship with the ECJ before we draw a line through the relationship entirely."

Tory former culture minister Ed Vaizey and senior Labour MP Rachel Reeves used a joint article in the Sunday Telegraph to criticise the decision to pull out of Euratom, the European civil nuclear regulator.

Justice Secretary David Lidington said a trade deal with the US would not make up on its own for the damage caused by Brexit.

He said he did not regret his warnings during the referendum campaign that Brexit could be a catastrophe for British business and prosperity.

Asked if a US trade deal could make up most of the damage done by leaving EU, he told BBC's Andrew Marr Show: "It wouldn't be enough on its own, no. But it would be a very good thing to have, as would trade deals with the emerging economies of Asia and Latin America.

"Certainly, one of the frustrations sometimes about being part of the EU is that while the mass of the EU gives it some leverage in international trade, it moves sometimes at a tortoise-like pace because all the member states have to agree a common negotiating position."

The UK on its own would be more flexible and there would be greater opportunities for trade deals.

Challenged on whether he regretted his previous comments on the impact of Brexit, he said: "No I don't.

"I took a very firm view in that campaign and before that I thought British interests were best served, both strategic and economic, by staying in the EU.

"But the people took a different decision, as they were democratically entitled to do."

Brexit Secretary David Davis has promised a trade deal which would deliver the "exact same benefits" as EU membership, but Mr Lidington said: "That will depend not just on us but on the EU 27."

CBI president Paul Drechsler said businesses were "no wiser" about what the future trading relationship will look like than they were a year ago and defended the organisation's call for a transitional deal retaining membership of the single market and customs union.

He also warned about rushing into trade deals with the US or other countries simply to attract positive headlines.

Mr Drechsler told Sky News' Sophy Ridge on Sunday: " As soon as anybody defines a plan for exit, sets out what it means, then we can transition.

"But in the meantime we don't have a plan, businesses around the country need to make decisions on investment, on whether to put their headquarters in the UK or somewhere else, on whether to place jobs in the UK or somewhere else.

"Those decisions are being taken now, so it's not about buying time. As soon as somebody has the plan then of course we can know what the future holds. At the moment we don't.

"We are no wiser today than we were 12 months ago in terms of what conditions business will be able to plan on for the future."

On the prospect of a US deal he said: "One has to recognise not every trade deal is necessarily a good and fair deal for both parties."

Trade negotiations are "a dog eat dog" process not a "diplomatic activity", he said, warning: "We are going for headlines rather than the facts and evidence."