Britain, EU should aim for customs union - Germany's BDI industry lobby

BERLIN, March 12 (Reuters) - Germany's BDI industry body

wants the European Union to agree a customs union with Britain to limit the impact on trade after it leaves the European Union, its managing director told the Frankfurter Allgemeine Zeitung newspaper.

The call from the BDI, which is Germany's biggest industry lobby and has close ties to Chancellor Angela Merkel's Christian Democrats (CDU), comes after Britain's CBI business lobby group earlier this year also called for a comprehensive customs union.

British Prime Minister Theresa May has, however, ruled out remaining a member of the European single market and the European Customs Union, saying that Britain wants the freedom to negotiate its own trade deals.

Britain is trying to negotiate a bespoke trade deal with the EU.

"From a political point of view, a trade agreement is clearly more realistic," BDI Managing director Joachim Lang told the Frankfurter Allgemeine Zeitung.

"But the idea of a customs union should not just be discarded, because from an economic point of view a free trade agreement does not go far enough," he added.

German industry is concerned about increased friction in trade with Britain after Brexit. Britain is the second-biggest export market for German car manufacturers.

A report by Oliver Wyman management consultants and law firm Clifford Chance released on Monday showed companies in Britain and the European Union face an extra 58 billion pounds ($80 billion) in annual costs if there is a no-deal Brexit. Britain's vast financial sector would be the worst-hit industry.

Lang said Brexit negotiations had made too little progress.

"At this stage, there should be much clearer ideas on the table about how things will continue after Brexit," he said. "The time pressure is enormous."

Britain is due to leave the bloc in March 2019. (Writing by Paul Carrel; Editing by Jon Boyle)