The impact of Britain’s vote to leave the European Union will shave around 0.25 percentage points off growth in Germany, Europe’s largest economy, in the coming year, a study quoted in a regional German newspaper suggested on Tuesday.
Exports, which have traditionally powered the German economy, are likely to fall by 9 percent on the year in 2017 due to the weaker pound, according to the study by the IW Cologne Institute for Economic Research that was cited by Rheinische Post.
Last year German companies exported goods worth about 89 billion euros (79 billion pounds) to Britain, making the United Kingdom their third most important export destination.
Researchers at the IW said the weaker pound against the euro, along with an expected decline in growth in Britain, would lead to lower growth in Germany even before Britain has left the EU.
In the past few weeks, concerns about a “hard” Brexit by Britain and a hardline stance by the EU in the negotiations that are likely to start next year saw sterling take a battering and fall to a record low on trade-weighted terms.
Imports to Germany will likely also fall by around 3.5 percent, the researchers said.
(Reporting by Michelle Martin; Editing by Victoria Bryan and Andrew Heavens) REUTERS