Via Financial Times

Hundreds of German companies have appealed for more direct support from Brussels and a business-friendly stance from EU lawmakers as they grapple with the effects of Brexit, the US-China trade war and a global economic slowdown.

Responding to a poll by the Stiftung Familienunternehmen, or Foundation for Family Businesses, some of the country’s most successful companies said the new European Commission must do more to boost competitiveness. They placed emphasis on simplifying taxes, reducing bureaucracy and deeper digital integration.

“Many companies are eyeing the Brexit negotiations in Brussels with great concern,” said Rainer Kirchdörfer, a board member of the Stiftung Familienunternehmen. “They have done everything they can to prepare even for the possibility of a hard Brexit — for instance, increasing their stocks. Yet it is impossible to predict the consequences of a hard Brexit and prepare for them.”

In contrast, a study on Friday by KFW, the German development bank, found that 15 per cent of Mittelstand firms — mostly legal, tax and business services providers — could actually benefit from a hard Brexit. They cited the prospect of rivals in the UK losing their competitive advantage, as well as the potential increase in the need for professional assistance from companies forced to reorganise their businesses.

Still, Mr Kirchdörfer said an extension to the Brexit deadline would be preferable to “going our separate ways at the end of October in an unregulated manner”.

Among the more than 1,400 companies surveyed was Otto Fuchs, a 110-year-old family-owned business that supplies non-steel metal parts to the likes of Airbus, BMW and Jaguar Land Rover, and claims to manufacture components for “every plane that flies”. 

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“We’re in turmoil right now, and the problem is that Europe is not standing together,” said chief executive Hinrich Mählmann, whose company also makes wheels for Minis assembled in the UK.

“The UK market is the largest car market in Europe after Germany, and if that continues to decline, it would harm everybody,” he added, as he urged Brussels “to work on a fair Brexit deal”.

The company, which has subsidiaries in China, India and South Africa and a large factory in Los Angeles, has also been hit by a decline in orders, exacerbated by trade tensions between Washington and Beijing. 

Much like many respondents, Otto Fuchs, which has an annual turnover of €3bn and employs 11,000 people worldwide, said it was concerned about being overburdened with red tape. “There is more and more bureaucracy in the EU, for instance public country-by-country reporting, which the EU wants to implement,” said Mr Mählmann.

“If our customers and our competitors can look into individual numbers for each country, that of course gives them insight that should not be available to them and we would be at a competitive disadvantage to companies that don’t have to comply with such a standard.”

Despite their pleas for more assistance from the EU, respondents to the annual survey expressed conservative views with regards to European integration.

There was little support for economic reforms proposed by incoming commission president Ursula von der Leyen, such as a European minimum wage, which just over 35 per cent of respondents favoured, and an unemployment benefit scheme, which almost half of businesses opposed. 

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Just 36 per cent supported a eurozone budget, and more than 60 per cent opposed an acceleration in the acceptance of further member states.

The survey was carried out with the help of the Ifo institute in Munich.