'Brexit knows no winners, all sides will lose' - German businesses warn of damage to EU and UK

Small and medium-sized firms (SMEs) in Germany could lose billions of euros in trade, should Britain be locked out of the single market, the boss of an industry body has said.

Mario Ohoven, the president of the BVMW, which represents approximately 270,000 SMEs in the Eurozone's largest economy, warned a so-called "hard Brexit" would be deeply damaging to both Britain and Germany.

"Germany exported goods worth €89bn to the UK alone in 2015, almost half of it was exported by 150,000 German SMEs," he said.

"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."

Ovohen also added there were a lot more firms trading indirectly with the UK, while others relied on Britain as far as their research and development strategies were concerned.

Last week, in her letter to the EU which triggered Article 50 to formally begin the process to take Britain out of the 28-country bloc, Prime Minister Theresa May confirmed the UK would "not seek membership of the single market" when negotiations begin.

Some have suggested European firms could benefit from a "hard Brexit" as it might ease competition, but Ovohen dismissed the notion that the "Mittelstand" - Germany's SMEs - would reap any benefits.

"The German Mittelstand does not believe in the world economy as a fixed size cake, in which every country has to fight against the other countries to increase its share," he said.

"A hard Brexit, or an increase in protectionism, will only lead to a decrease of the cake as a whole," he warned. I want to be very clear here - Brexit knows no winners, all sides will lose."

The BVMW chief also stressed SMEs in Germany were heavily reliant on the four freedoms of the EU - free movement of people, goods, capital and services - adding that approximately 6% of the Mittelstand total workforce came from other EU member states.

His comments over a "soft Brexit", however, are in stark contrast with the official line taken by the majority of German politicians, who have repeatedly stated Britain will not be able to remain in the single market unless it agrees to guarantee freedom of movement to EU citizens.

In September last year, the head German business lobby BDI, which represents larger firms, told the BBC it was "better to have a hard Brexit that works".