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Spotlight: Anglo-German Relations

 

Germany and the UK have shared strong cultural and historical ties dating back to the 1700s, when the German Georg Ludwig became George I of England in 1714. Furthermore, the British royal family changed their surname from the German von Sachsen-Coburg-Gotha to Windsor as recently as 1917.

Despite turbulent periods in modern history, reports from the British Council have shown that young Germans believed the UK was the most attractive G20 country, citing the British public’s politeness, friendliness, and cultural quirkiness as key factors. This is reciprocated in their reports of British young people believing that German institutions, government, and people can be trusted more than any of the other G20 countries. It is clear that the modern relationship between Germany and the UK is strong.

Government statistics show that Germany is a fundamental trading partner, being our largest source of imports at £75.1bn and also the destination for £49.1bn worth of exports in 2016. Germany in particular has benefited from their trade relationship with the UK, having a trade surplus with us that has grown by 75% in just 5 years. It is clear that the commercial relationship between the UK and Germany is very important to both economies.

Since the Brexit vote, there has been a noticeable increase in German companies setting up local subsidiaries in the UK and we at Ecovis can attest to having helped numerous clients, which want to expand or set up business in the UK.

There are many reasons why a German company may want to set up a local subsidiary in the UK, including:

  • Ensure frictionless trade with the UK’s large domestic market after Brexit;
  • Similar business culture;
  • Company-friendly tax system and lower corporation tax;
  • Favourable employment laws and having a subsidiary in the UK to act as a local employer may aid in bringing over German staff after Brexit;
  • Potential access to any future trade agreements which the UK may conclude with non-EU countries. This would be advantageous with countries such as the US, which has already made their interest in securing a free trade agreement with the UK public.

On the other side, the German government released 2017 figures showing that UK investment projects in Germany had risen by 21% in 2017 and around 240,000 people in Germany work for British companies based there.

With Ecovis having multiple offices in Germany, sharing employees to ensure that expertise in local law is distributed throughout the network, and with German speakers in-house, we are well placed to help any German company wishing to set up in the UK or vice versa.

Please feel free to get in touch with Gerry Collins, our FDI partner to discuss any future investment plans.