No-deal Brexit could cost Germany 100,000 jobs, according to study

A no-deal Brexit could cost more than 100,000 jobs in Germany, hitting the auto and technology industries worst.

No-deal Brexit could cost Germany 100,000 jobs, according to study
The BMW plant in Dingolfing, Bavaria. Photo: DPA

That’s according to a new study by an economic research centre, which found Germany would be the worst hit EU country when it comes to jobs in the event that the UK leaves the EU without a withdrawal agreement in place.

The research, conducted by the Leibniz Institute for Economic Research Halle (IWH) and the Martin Luther University Halle-Wittenberg, looked at the effect of a hard Brexit on different parts of Germany, and showed the automobile and technology industries would bear the brunt.

SEE ALSO: Brexit planning: What you need to know about Germany's plans for a no-deal

SEE ALSO: 'Horror Scenario': How Brexit could affect Germany

“In no other country is the effect on total employment as great as in Germany,” one of the authors of the study, Oliver Holtemöller, told the newspaper Welt am Sonntag.

The study came as fears continue to grow over the outcome of Brexit. The UK is still scheduled to leave the bloc on March 29th, but there is currently no deal in place.

Business leaders in Germany have long been warning of the consequences of the UK leaving with no withdrawal agreement in place, saying it could cause huge disruption to trade.

SEE ALSO: German business warns of Brexit 'chaos'

Nonetheless, the financial capital Frankfurt has seen positive effects in the run up to Brexit, as several companies have relocated there or plan to in future.

On Sunday, a spokeswoman for the British government confirmed to DPA that Prime Minister Theresa May wanted to ask the parliament in London for more time for renegotiations with the EU. A vote on how to move forward is now scheduled for February 27th.

Car industry would be worst hit

After a so-called unregulated or disorderly Brexit, customs duties would be levied on imports to the UK. The  study captured how a resulting slump in exports would affect the job market in Europe. Further Brexit dangers for the labour market, such as unwillingness to invest, were not taken into account in the figures.

SEE ALSO: Frankfurt confident it is the big Brexit relocation winner: Special report

The researchers believe the states in most danger in the event of a no-deal are Baden-Württemberg, Bavaria and North Rhine-Westphalia, where car companies such as Audi, BMW, VW and Mercedes are based. States in eastern Germany, on the other hand, would not face the same high risks.

The car industry would be hit the hardest by a decline in exports, the study found. Measured in terms of the total number of employees, the greatest effects would be felt at VW's Wolfsburg location and at BMW's Dingolfing-Landau location in Lower Bavaria.

SEE ALSO: Germany softens firing rules to lure banks fleeing Brexit

For Wolfsburg, research showed that 500 employees were potentially affected, for Dingolfing-Landau it was 265. In both cases this amounts to about 0.4 percent of the total workforce.

Many employees (726 or about 0.3 percent) would also have to fear for their jobs in the Böblingen district near Stuttgart. Technology companies such as IBM and Siemens are located there, and Daimler also has a plant.

The situation is similar in Märkischer Kreis in southern Westphalia, where many medium-sized companies with foreign business are located – according to the study, 703 jobs or 0.3 percent of employees are potentially threatened here.

Over 600,000 jobs worldwide

The study showed that 612,000 people worldwide could lose their jobs after a no-deal Brexit. In France almost 50,000 workers would be affected, according to researchers' calculations, while in China it's 59,000.

In the study the authors assumed that British imports would collapse by 25 percent after a no-deal Brexit – a value that corresponds to to current estimates. They developed a formula that allowed them to calculate how such an import slump would affect which industry and which country. This was based on data from the World Input Output Database (WIOD).

Other Brexit news, on the other hand, should give hope to workers in the EU. The Dutch Ministry of Economic Affairs announced on Saturday that 42 British companies had moved to the Netherlands since 2018. According to their statement, €291 million has been invested in the move and some 2000 jobs have been created.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members


7 tips for how to survive as a freelancer in Germany

Taking the decision to go it alone and freelance in Germany can be a daunting prospect. But, if you do it right, it can be an exciting and liberating path. Here are some of our top tips on how to survive.

7 tips for how to survive as a freelancer in Germany

1. Get a tax advisor

The German tax system is complicated, even for Germans. All the associated paperwork uses the Amtsprache (authority language) which is more like legalese than ‘normal’ German, and mistakes when filling out tax forms can cause you, at best, a massive headache and, at worst, a costly fine. So it’s best that you employ someone who knows what they’re doing to help you out.

That person is called a Steuerberater (tax advisor) in Germany. They will help you register with the tax office, correspond with them and submit your tax declarations.

Be aware that, in Germany, different deadlines apply for tax returns depending on whether you employ an official tax advisor or not. If you are doing the tax return on your own, the deadline for submitting your annual tax return is earlier than if you use a tax advisor’s services. 

READ ALSO: What NOT to do when you’re freelancing in Germany

When looking for a tax advisor, a top tip is to use your network to get recommendations. Ideally, you want someone who will do more than just fill in the forms for you, but who will actually advise you on how best to manage your business finances so that you can make tax savings.

2. Keep your accounting in order

The better you keep your own accounts in order, the easier it will be for your tax advisor to compile your tax declarations and therefore the cheaper their services will be.

As a freelancer, there are a lot of costs you can deduct from your taxes – from train tickets, working materials, to meals out – so it’s best to keep hold of all your receipts and to keep them in good order.

2 euros and 50 cents lie on a receipt in a beer garden. Photo: picture alliance/dpa | Peter Kneffel

In Germany, you’re obliged to keep hold of receipts for two years, in case of a tax inspection, so it’s a good idea to photocopy the type of machine-printed receipts you get from restaurants so that they stay legible for a long time.

There are also a few things to be aware of when writing your own invoices. Firstly, make sure that you include your tax number. This isn’t the 11-digit Steueridentifikationsnummer that everyone gets when registering in Germany, but the 10-digit Steuernummer you get from the Finanzamt after registering yourself as a freelancer. 

Most companies won’t pay you if you don’t have this on your invoices so make sure you include it.

You should also make sure that you number your invoices properly – ideally in ascending order so that you can easily keep track of them. You are not allowed to issue two invoices with the same number and if you do so and the finance office notices, you could face an inspection of your whole accounting system.

There are numerous great accounting software programmes you can use to help you, such as Lexoffice and Sevdesk and, even if you have to pay for them, the costs will be tax deductible!

3. Find out if you’re eligible for financial support

In Germany, there are several opportunities for freelancers to gain financial support and to cut their outgoings, and its worth finding out if you’re eligible for them.

If you’re claiming unemployment benefits under ALG 1 and are thinking about becoming a freelancer, the employment office offers a special type of financial support to help you to get your freelance business off the ground.

Called the Grundungszuschuss (“foundation grant”) the payment is a six-month grant equalling your monthly entitlement under ALG 1 plus €300 towards your insurance costs can be applied for those in receipt of this unemployment benefit.

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

If you are engaged in some form of artistic profession in Germany – which can include journalism to pottery – you may be entitled to membership to the Kunstlersozialkasse (artists’ social insurance).

Being a member of the KSK means you only have to pay half of your health insurance and pension contributions, and the KSK will pay the rest.

4. Work out how much you think you will earn

As with starting any business, you need to have some idea of your expected earnings from the outset.

If you’re just starting out as a freelancer, or have some freelance gigs on the side of an employment position, then it might be worth considering registering yourself as a Kleinunternehmer (“small business”).

As a Kleinunternehmer, you can currently earn up to €22.000 per year without having to charge VAT and having to submit only yearly tax declarations. 

An income tax declaration form lies on a table. Photo: picture alliance/dpa/dpa-Zentralbild | Hans-Jürgen Wiedl

Be aware that if you are registered as this kind of freelancer, you must include the following sentence in your invoices: ‘Gemäß § 19 UStG wird keine Umsatzsteuer berechnet’ which means ‘In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.’

READ ALSO: Everything you need to know about your German tax return in 2022

If you think you will earn more than €22.000 per year, you will need to pay Umsatzsteuer (VAT) and will have to submit tax declarations in advance and more often. Depending on how much you earn, this could be every month or every quarter. 

5. Get your insurance in order

In Germany, it’s a legal requirement to have health insurance.

If you’ve just made the move from employment to being a freelancer and want to keep the same health insurer, you should get in contact with your health insurance provider straight away to tell them about your change of circumstances. They will ask you to re-register and to tell them your projected freelance earnings for the year, so they can amend your monthly fees.

If you don’t keep your health insurer provider updated, you could continue to be charged the higher rate that you had from your previous salary.

The insurance cards of the health insurance companies DAK, AOK, Barmer and Techniker-Krankenkasse TK lie with euro notes under a stethoscope. Photo: picture alliance / dpa | Daniel Karmann

It’s not just health insurance you need to think about as a freelancer. It’s also wise to think about protecting yourself from any sort of claims that could arise as a result of any working mishaps. 

If, for example, you lose your laptop which contains confidential client information, you need to be protected against claims.

That’s why it’s good to have both Betriebshaftversicherung (business liability insurance) and Rechtschutzversicherung (legal protection insurance).

6. Plan your time wisely

All of these bureaucratic obligations take time. So it’s really important that you take account of that when planning your time. For example, planning half a day a week to deal with your invoices, filing, emails to clients, and conversations with authorities can be really beneficial when scheduling your working time. 

7. Grow your network

As a freelancer, networking is absolutely crucial to success. 

Keep an up-to-date profile on websites like LinkedIn and German equivalent XING and keep in contact with anyone you’ve ever worked with, no matter how brief the contact was. 

Having a network is not only about getting more clients, but also about building a support network in your field to exchange advice, tips and generally for your own enrichment. 

Participating in workshops related to your field, going to seminars, and meet-ups, can be great ways of broadening your network.