A so-called "hard Brexit" could see exports from the rest of the European Union to Britain fall by as much as 50 percent, a German institute claimed Tuesday.
Lawmakers in London and the Brussels are hoping to finalize terms of the U.K.'s departure from the EU at a two-day summit beginning on October 17. A hard Brexit is commonly seen as the U.K. leaving the EU's customs union and the single market. The customs union is an agreement that allows partaking countries to set common external tariffs, allowing goods to travel freely between those countries. The single market is a deeper form of co-operation between member states that allows the free movement of goods, services, money and people in the bloc.
The IW institute in Cologne said in its paper that Britain's departure from a customs union could mean that more than 15 billion euros ($17 billion) of annual tariffs will be placed on companies based on both sides of the English Channel.
Germany would be particularly affected by the loss of frictionless trade, the IW said, with a worst-case estimated loss of 57 percent of current exports to Britain. The EU to U.K. total figure is placed at 50 percent.
"The manufacturing-intense regions in Germany face the highest Brexit exposure on the continent, with roughly 5 percent of GDP (gross domestic product) being directly or indirectly dependent on U.K. trade," the study said.