German industry warns of 'massive crisis' from no-deal Brexit

German industry warned that Europe risks sinking into chaos and trade will collapse if UK and European Union leaders fail to resolve their differences on the future of Britain's relationship with the bloc, stepping up pressure amid a final push for a deal.

"The next EU summit in two weeks must bring a breakthrough in the talks,” Joachim Lang, managing director of Germany's powerful BDI industrial lobby, said Tuesday at a press conference in Berlin. "Otherwise, Europe is in danger of sliding into a disorderly Brexit. The result would be a massive crisis."

The fallout of a no-deal Brexit could cause German exports to the UK to tumble as much as 57% as tariffs and customs barriers impede trade, the IW economic institute in Cologne said in a study published Tuesday.

Industries that would be particularly hard hit include logistics, autos, aerospace, pharmaceuticals and chemicals, according to the BDI.

'Horror scenario'

"This horror scenario should push policy makers into constructive action," Markus Jung, an IW researcher, said in the report.

The alarm bells from German industry reflect mounting tension ahead of the critical 17 October summit.

The UK hinted on Monday that a breakthrough in negotiations may not be imminent, insisting the EU must make the next move on how Britain’s future ties with the bloc will be organised.

Brexit has already been hard on German companies, with some chemicals and pharmaceutical firms each spending as much as €100 million to prepare, according to the BDI's Lang.

"That's money they certainly could have used for other purposes," he said, adding that a transition period through at least the end of 2020 was essential for German firms.

Any new customs formalities would be "a negative deviation from the status quo, which can't be welcomed by industry either in Great Britain or in continental Europe".