7 June 2018
Germany and the UK: Partners in business
CBI President Paul Drechsler speaks to the German-British Chamber of Commerce about the business links between Germany and the UK, past, present and future.
It’s great to join you tonight.
To represent the CBI.
And to celebrate the links between German and British business.
The links are close.
Including on a personal level.
When I was 20 I spent three months in the Harz Mountains, near Hanover.
My friends asked what I was doing there.
I told them I was learning how to cook.
They were impressed.
On my return I was lauded as a culinary king, a master of continental cuisine.
The truth was more mundane.
I had been working for Sonnen Bassermann, picking the bad beans off a conveyor belt.
But I still say that I came back with more culinary expertise than many of my friends in the UK.
So that’s a personal link to Germany.
But there are deep CBI links too.
The CBI’s offices are on Cannon St.
Just 2 miles from here.
It’s a typical City neighbourhood.
Banks, law firms, accountancies.
Yet for 600 years, between the thirteenth and nineteenth centuries, the site of the CBI’s offices was the Stalhof.
A self-governing German community.
Four hundred German merchants lived and worked on that spot, allied to the Hanseatic League, with their wharves, warehouses and Rhenish wine-houses.
We don’t mention it much.
We don’t want to encourage those who claim the CBI’s foundations are secretly in Europe.
What would Jacob Rees-Mogg say?introduction
German-British links matter
Tonight, of course, is a celebration of shared interests.
And there may not be a self-governing German district in the City any more.
But make no mistake: British and German businesses matter to one another.
Germany is the UK’s 2nd largest trading partner.
We buy more goods and services from Germany than we do from anywhere else.
UK firms have invested £18 billion in Germany.
And in return, German firms employ 400,000 people here.
So the CBI is proud to count in our membership great German businesses such as Siemens, BMW,
Bosch and Deutsche Bank.
Those are the business links.
But there are also the cultural links.
The traditional friendly World Cup meeting between England and Germany, which everyone enjoys so much that 90 minutes is never enough.
Let’s add another half an hour on top.
And to prolong the fun even longer, why not finish with a penalty shoot-out – before, in time-honoured fashion, England magnanimously ushers Germany on to the final.
Because the links are close.
Even down to the conversation I heard on the tube.
One convinced that Prince Harry was about to marry Ms Merkel.
We have much in common.links
Of course, tonight there’s an elephant in the room, a pachyderm in the St Pancras Hotel.
The UK’s departure from the EU.
It’s an immense challenge for business.
But it’s because our economies are so intertwined that I think a sensible deal can be signed.
I’ll come on to that in a moment.
But here’s what worries me.
Perhaps the greatest obstacle to progress on Brexit isn’t practical but cultural.
Here, if Theresa May delivers a 40-minute speech on Brexit, we think: finally, some progress.
But in Berlin, it means nothing unless it’s a 100-page contract full of compound words invented just for the purpose.
Or in London, when Berlin says “no”, our politicians ask
…is that a maybe?
…or is it a yes?
But here’s the point.
Amid all the political uncertainty, Europe’s business organisations have never been so important.
Whether it’s the German British Chamber of Commerce.
BDI, or BDA.
Because the Brexit negotiators need to hear from business.
We’ve got a lot to offer.
We’re used to negotiating deals that work for all sides.
We’re used to operating across borders and cultures.
And we’re used to basing decisions on evidence, not ideology.
So it’s good that we’re all working together so closely.
And on so many points, we’re in agreement.
We’re agreed on the need for some form of continuing customs union, at least until some better alternative is found.
We’re agreed that the UK needs a deep relationship with the single market.
And we’re agreed on the continuing importance of the City of London.
So let me say more about each of these.
On the customs union, as the Chair of a shipping company I am delighted that suddenly everyone’s sharing my interest in ports, logistics and border arrangements.
But I also know a logjam when I see it.
The Brexit negotiation has been held up at customs.
Clearing the way will require creativity – on both sides.
And recognition that no existing model fully works for the UK.
But we should remember.
Norway, Turkey, Switzerland – all these were new models once.
Yet unless and until we find a model that works, the UK should remain in a customs union with the EU.
This isn’t an easy message for some to hear.
But that doesn’t mean we should stay silent.
Because in the negotiations, now is the moment of most danger.
If the negotiations are to succeed, and jobs and prosperity are to be secured, companies must speak up about what the different choices mean.
And the time to speak up is now.
But even then, getting customs right will only solve 40% of the problem.
The other 60% depends on our relationship with the Single Market.
It’s one of the most sophisticated systems of economic rules in existence.
Since its creation in the 1990s, trade between Germany and the UK has increased dramatically.
It benefits us all.
Yet for this trade to be maintained and to grow, we need to keep the barriers low.
Here, again, we need negotiators to be flexible.
To respect the referendum call for more control.
To recognise our starting position of convergence.
But also to preserve easy access between the UK and the Single Market, for goods and services flowing in each direction.
And let’s be clear.
Only a deep relationship between the UK and the Single Market will maintain deep EU access to the City of London’s liquid capital markets.
This really matters – to both sides.
Financing from UK banks helps German firms invest and grow.
Between 2011 and 2016 alone, EU firms accessed €400 billion of global capital through the City of London.
And it’s not just borrowing.
A third of the trading in Siemens shares takes place on UK platforms.
And the City of London gives EU firms access to expertise that doesn’t exist anywhere else.
Sixty per-cent of the world’s aviation insurance, for instance.
It’s highly specialised.
But without it, the world’s fleets can’t fly.brexit
Looking to the future
Now, there’s much to do before all this is resolved.
And we won’t solve it tonight.
But the sooner we do, the sooner we can start planning the future.
Because whatever happens, Germany and Britain will remain partners.
And we still have so much to learn from one another.
One of the things I care about passionately is education.
I’ve made it a consistent theme during my time at the CBI.
And everyone in business in the UK can look with envy at the German vocational system, which instils such pride in those who pursue an apprenticeship.
It works for the economy, it works for business and it works for people.
Then there’s Germany’s performance on exporting.
Germany is brilliant at it.
And at a time when our government wants business to build a global Britain outside a customs union, one of my favourite stats is that Germany exports 5 times more to China than the UK does.
And all from within the customs union.
It’s no secret why Germany does so well.
It’s the Mittelstand culture.
It’s down to the German Chambers of Commerce, like this one, doing such great work for firms on both sides.
And there’s also the simple truth: that great exporting begins at home, with firms making brilliant products that customers buy.
And Germany makes what China wants.
So, there’s much we can learn from Germany in the years ahead.
But it works the other way too.
And it’s not just finance.
The future is digital.
And today the UK remains Europe’s most attractive location for international investment in tech.
We attract over a quarter of all tech investment in Europe.
And London secures four times more tech investment than Berlin1.
And I haven’t mentioned our mutual pharmaceutical trade.
There’s a chain of expertise that stretches from Glasgow to Görlitz.
Brilliant companies innovating, developing new products and saving lives the world over.
Every company learning, competing and sharing knowledge with every otherfuture
I could go on – and talk about our universities, our service sectors, our R&D.
But I think the point is clear.
Germany and Britain have been trading-partners for centuries.
For almost as long as we’ve been trading jokes at each other’s expense.
But it’s thanks to the work of great business organisations like the German-British Chamber of Commerce that the trading relationship will continue.
But let me finish with an observation.
Near the CBI’s offices on Cannon Street, there’s a plaque on the wall.
It’s a memorial to the merchants of the Stalhof.
And includes a line by Friedreich Schiller.
“Das Alte stürzt, es ändert sich die Zeit, Und neues Leben blüht aus den Ruinen.”
The old falls, the times change, and new life blooms from the ruins.
It’s that energy of renewal and hope – the same energy that allows business to find a way forward, overcome obstacles, and forge new futures – that we need right now.
And I have no doubt that we will succeed.