Mario Ohoven, the president of BVMV which represents more than 270,000 small and medium-sized businesses (SMEs) in Germany, warned against the UK being allowed to quit the EU without a divorce deal.
He outlined the risks to German jobs and a possible shrinkage of the European economy should the EU push Britain into trading with the bloc on tariff terms at the end of two-year exit negotiations.
Mario Ohoven hinted at the pressure Angela Merkel will come under during Brexit talks
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Speaking to the BBC, Mr Ohoven described the huge worth of UK trade to the German economy.
He said: “Germany exported goods worth €89billion to the UK alone in 2015, almost half of it was exported by 150,000 German SMEs.”
Despite Theresa May’s vow to pull Britain out of the EU’s Single Market and Customs Union, the German business chief called for the UK to pursue a so-called ‘soft’ Brexit and remain a member of the bloc’s internal market.
He added: “In the end, a soft Brexit should be reached.
“It is important that the UK stays in the Single Market, or that the UK joins an agreement similar to the the EFTA (European Free Trade Association), similar to Norway or Iceland.
"The worst result would be if the EU and the UK did not reach an agreement in time.”
The worst result would be if the EU and the UK did not reach an agreement in time
German business leader Mario Ohoven
Following Theresa May’s Article 50 notification of Britain’s EU departure, German Chancellor Angela Merkel ramped up tensions ahead of Brexit negotiations by dismissing the Prime Minister’s call for a divorce settlement and a future UK-EU trade deal to be discussed at the same time.
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Mrs Merkel, who has also blocked an early deal on guaranteeing the rights of EU migrants in the UK, demanded Britain agree an exit deal – including a likely multi-billion pound Brexit bill – before being allowed to negotiate future trade terms.
But Mr Ohoven highlighted the pressure Mrs Merkel could come under from German business leaders if she puts at risk the prospect of an EU-UK free trade agreement being signed in 2019.
He said: “We shouldn't forget that 750,000 jobs in Germany depend on the trade with the UK.”
In pictures: Theresa May meets with EU's Tusk Thu, April 6, 2017
The two leaders held talks on Brexit negotiations
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European Council President Donald Tusk gestures to members of the media as he leaves 10 Downing street after talks with British Prime Minister Theresa May in central London
Mr Ohoven also criticised Mrs May’s decision to quit the Single Market, due to the EU’s insistence Britain must retain free movement rules should it wish to remain a member.
He added: “A hard Brexit, or an increase in protectionism, will only lead to a decrease of the cake as a whole.
"I want to be very clear here – Brexit knows no winners, all sides will lose."