One of Germany’s leading economists welcomed news on Friday that the EU had reached an initial deal on the terms of Brexit with the UK, but warned that the EU now needed a free trade deal.
“This is very good news,” Clemens Fuest, President of the Munich-based ifo Institute said in response to news that the British government and Brussels had agreed on the shape of Brexit and could now move on to discussing a trade deal.
“Now the EU needs to strive for a comprehensive free trade deal with Great Britain so that the harm to economies on all sides is minimized,” he stated.
On Friday, the European Commission confirmed that a breakthrough had been reached with Britain over the terms of Brexit, with consensus reached on the border between southern and northern Ireland, citizens’ rights and the UK’s “divorce bill.”
Fuest urged the parties to now reach a trade deal that would “cut the incurred costs by half.”
The economist, who is an advisor to the German finance ministry, said that a free trade deal could cut the yearly losses incurred by the EU through Brexit to €27 billion, while it would lead to the UK being in roughly the same financial situation as it is now.
Citing a report published by the ifo Institute in November, Fuest warned that not reaching a free trade deal would leave the UK €16 billion worse off each year while the EU would lose €44 billion a year.
“Brexit knows only losers,” he said.