10 May We Must Rebuild Trust with German Businesses – David Scrimgeour
For British companies and economic development agencies the world of trade and investment with Continental Europe has changed dramatically since the beginning of 2021. Unfortunately, there is little or no awareness in the UK of the significance of these changes. For Scotland, with its claim to being more pro-European than the other Island nations, this will mean a radical change of mindset if cross-border business activity with mainland Europe is to be maintained. And we must become much more proactive in promoting Scottish strengths.
As a Germany-based consultancy we have, over the years, organised numerous events and trade missions here for Scottish organisations. In Spring last year we were planning a multi-sector trade mission from the Highlands to Munich which then had to be postponed due to the pandemic. Recently, I spoke with my contacts at Munich Chamber of Commerce – Europe’s second-largest Chamber after Paris with over 400,000 member companies – about the possibility of organising the mission this year or next. The answer was clear: “keine chance” – no chance.
It is vital that we realise that this massive loss of revenue for tens of thousands of German companies has dealt a powerful blow to trust in the UK as a reliable business partner and safe location for investment. The chambers of commerce in Germany also have a huge and continuing workload of enquiries from their member companies about trading with the UK, hence the reaction of the Munich Chamber.
Over the last five years since the Brexit referendum most German companies with business interests in the UK have been preparing for an unknown outcome and investing time, money and human resources. BMW, for example, had 200 permanent staff working for years on scenario planning. This uncertainty impacted heavily on trade between the UK and Germany. Between 2015 and 2020 exports from Germany to the UK decreased by €22 billion (£19 bn) – ie from €89bn to €67bn, a drop of 25per cent.
A new economic development strategy is urgently necessary if Scotland will continue to benefit from business with Germany. We need to identify those future opportunities where the impacts of the UK’s exit from the EU are less significant and where our business partners also see potential for growth.
I was approached recently by the Baden-Württemberg Government on behalf of a regional automotive cluster seeking contact with the Aberdeen Region. The German automotive industry is being forced by EU legislation to reduce carbon emissions and is exploring the use of green hydrogen as a fuel. The cluster managers knew about Aberdeen’s expertise in mobility applications for hydrogen and are keen to share knowledge and to develop joint projects, also with EU funding.
Another field which has great potential is the space industry. Bavaria is one of the leading space clusters in Europe and Scotland offers satellite manufacture and launch capability as well as downstream data services. A trade mission on space would, I believe, be welcomed with open arms by our Bavarian friends.
– David Scrimgeour MBE, formerly the Scottish Government’s investment representative in Germany and Austria, is now working as an energy consultant in Munich