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Abstract

The United Kingdom (UK) is an important destination for German agri-food products. This becomes especially apparent when looking at the German-UK trade balance of agricultural products, where Germany had a surplus of 3.1 Billion € in 2016. Furthermore, the UK is the trade partner where Germany exhibits the largest trade surplus. Those facts already suggest that Germany is likely to be affected by a changing trade environment following Brexit. In this working paper we are considering a soft Brexit scenario where we assume a deep and comprehensive free trade agreement and a more protective hard Brexit scenario with reciprocal imposition of MFN tariffs between EU and UK. The model results suggest that the decline in production value of German agri-food products amounts 400 Million € in the soft Brexit scenario and is three times larger in the hard Brexit scenario.

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