German bosses say Brexit may have silver lining for Ireland

Germany business leaders have suggested Brexit may come with a silver lining for Ireland: boosting its attractiveness as an English-language business base for German firms already winding down engagement with the UK.

Dr Volker Treier, head of foreign trade at Germany’s chamber of commerce (DIHK), said member firms were investing less in the UK, with some already ready to write off part of their investment in Britain amounting to €120billion and 400,000 jobs.

"In a recent survey we did of German companies investing in Britain, every ninth firm plans to repatriate investment to Germany or shift it to other locations," he told The Irish Times. "Brexit is already having a negative effect."

So has Brexit made Ireland more attractive to German companies?

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"Definitely," said Dr Treier, after hosting a roundtable meeting with Taoiseach Enda Kenny on Friday in Berlin with German industry and employers' officials, as well as banks and the federal economics ministry.

He said although understanding of Ireland’s Brexit concerns was already “very high” among Germany’s business community, it was helpful to hear Mr Kenny’s remarks on the looming challenges for Ireland on trade.

After the UK voted to leave the EU last June, chancellor Angela Merkel has secured assurances from German business leaders that the national and European interest trumps their business interests. Nine months on this unified position continues to hold despite concerns – particularly among the influential auto industry – that a bad Brexit deal could compound the loss of the UK from the EU.

So how did Dr Merkel secure German backing for her position, and will it hold in the two years ahead?

Single market

Dr Treier said she appealed to business common sense: that it is important to defend the single market, by far the bigger market for German companies taking 60 per cent of total exports.

"Dr Merkel doesn't have to wave a big stick. German unity between business and politics is based on the realisation … that the integrity of the internal market is even more important than the important relationship to our third largest market, the United Kingdom. "

Such solidarity need not extend to tax matters, however. In a recent interview with Der Spiegel, Dr Treier suggested Britain's EU departure might lead to London "trying to attract firms with low corporate taxes, which would certainly not be against German business interests".

Is he concerned that a race to the bottom by a post-EU UK might undermine Irish economic interests or complicate life for German politicians already struggling to explain European tax competition to their voters?

Dr Treier said tax competition among countries based on “fair sensible rules” was always welcome, and suggested Brexit might prove a shot in the arm for efforts to counter aggressive tax competition taking place at OECD level.

“The decisive question is whether Ireland in the past always used the correct tax basis,” he said.

Given ongoing talks on the shifting of profits to low-tax countries, he added: “Brexit can bring something positive because it drives this debate in the public.”

Land bridge

The Taoiseach and other Irish voices at the Berlin roundtable on Friday stressed the importance of heeding in Brexit talks the reality of the British “land bridge” by which Irish exports cross to their European markets.

Representatives of the German-Irish Chamber of Industry and Commerce (AHK) said Brexit was a warning for Irish exporters to diversify their export markets beyond the UK.

People used to be very price conscious here but younger people are happy to pay good money for good food

"Germany is the next major market for Ireland, but awareness of that is quite low," said Jonathan Hackett, AHK president and chief executive of Botany Weavers, a leading producer of aircraft seat fabrics. "My job is to familiarise Irish companies with the huge resources the AHK have throughout their office in Germany, to help increase trade between the two countries."

Mr Kenny ended his Berlin visit at a Bord Bia event, talking to buyers of Irish food in Berlin and Irish meat exporters.

Stefan Strohmyr, of ABP's German operations, said Ireland's marketing push as a sustainable food producer was well-timed in Germany. "People used to be very price conscious here but younger people are happy to pay good money for good food."

Convenience food producer Matthies said the firm was desperately looking for new producers of lamb. "The market has dried up here, and we'd be delighted to take lamb from producers in Ireland," said manager Christian Schwich.