March 7, 2019 / 5:24 PM / 7 months ago

Germany is prepared for all Brexit scenarios - Finance Minister Scholz

LEIPZIG, Germany (Reuters) - Germany and its customs authority are prepared for all Brexit scenarios, including Britain crashing out of the European Union without a divorce deal setting out future relations, Finance Minister Olaf Scholz said on Thursday.

German Finance Minister Olaf Scholz attends a media briefing during his visit to Beijing, China, January 17, 2019. REUTERS/Thomas Peter

EU officials have told Britain to rework its Irish backstop proposal by Friday but fear it will struggle to secure a deal that satisfied pro-Brexit lawmakers before a key vote in the UK parliament on Wednesday.

Just three weeks before Britain is due to leave the EU, the two sides are locked in a game of brinkmanship and attempts to reach a mutually acceptable deal could go down to the wire.

“All necessary precautions have been taken,” Scholz said during a visit to a logistics hub at an airport in the eastern city of Leipzig, adding that the government had already agreed to hire 900 additional customs officers.

Asked how high he estimated the risk of a no-deal Brexit, Scholz said that this was difficult to predict.

Scholz said a solution had to be found which guarantees free travel of people and free exchange of goods at the border between Ireland and the British province of Northern Ireland, adding that this was also vital to maintain peace in the region.

Northern Ireland’s fate has come to play a pivotal role in the final weeks before Britain is due to leave the EU, as its frontier with Ireland would be the only British land border with the EU.

The Good Friday agreement of 1998 that ended 30 years of sectarian unrest in the province demands that border control posts never return to the frontier. But EU rules require border checks with countries outside its single market.

Among Germany’s large companies doing business with Britain, every second one has put contingency plans in place to cushion the impact of a no-deal Brexit, a survey by German industry group BDI and accounting firm Deloitte showed on Thursday.

About 36 percent expect Britain actually to crash out of the EU without a deal, the survey showed. Only 6 percent of the 262 surveyed companies expect Brexit will never happen, while 25 percent expect Brexit to be delayed beyond March 29.

On the upside, German companies expect a boost for Frankfurt as a financial hub and a rise in foreign direct investments as firms could relocate from Britain to Germany to maintain access to the EU’s common market, the survey showed.

With Germany having barely escaped a recession in the second half of last year, a no-deal Brexit and looming U.S. tariffs on cars could destabilise its export-reliant economy.

Reporting by Christian Kraemer; Writing by Michael Nienaber; Editing by Joseph Nasr/Mark Heinrich

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