There is a smug conviction in the UK amongst staunch Brexit supporters that the EU needs the UK more than it needs them and consequently, the EU will grant Britain whatever it wants to see the minimum perturbation to the trade relationship between the UK and the EU27. Most thinking people believe that this, not to put too fine a point on it, is utter bollocks.
The economic performance data for EU states has recently been published. Germany is the largest economy in the EU and its Q3 data shows that the economy continues to grow, but the rate of growth has slowed across the year: Q1 saw growth of 0.7%; Q2 came in at 0.4% and Q3 at 0.2%. Germany’s Federal Statistics Office noted: “The development of foreign trade had a downward effect on growth. Exports were slightly down while imports were slightly up compared with the second quarter of 2016. Positive impulses on the quarter came mainly from domestic demand. Both household and state spending managed to increase further.”
The UK’s decision to leave the EU has increased business uncertainty in Germany. Equally, the exact complexion of President-elect Trump’s trade policy could also be negative if the rhetoric on reducing free-trade and protectionism is acted on.
German Q3 GDP growth slipped below the Eurozone average figure of 0.3%. Growth was lower than anticipated for Hungary, Slovakia, the Czech Republic, but Italy grew at a better than expected rate of 0.3%, recovering from stagnation in Q2. France beat pessimists that predicted a contraction of 0.1% in Q3 with growth of 0.2%; Spain grew by 0.5% and Spain by 0.7%, but both were below forecast. On the other side of the balance sheet, the Austrian economy grew faster than predicted at 0.5%; Portugal managed 0.8% economic growth.