British Brexit negotiator David Frost (center) arrives for negotiations with EU representatives at EU headquarters, in Brussels on Monday. The EU and Britain launched an intense five weeks of negotiations on a deal to define their post-Brexit relations. Photo: AFP

The Federation of German Industries (BDI) warned on Friday of massive economic consequences if the post-Brexit trade negotiations between the European Union (EU) and Britain fail to produce an agreement by Dec. 31, 2020, the end of the scheduled transition period.

"Without clear guidelines for trade in goods, Brexit will become an economic disaster for companies," said BDI Director General Joachim Lang. Britain's withdrawal from the EU without a trade agreement would be the "worst outcome for all sides."

Although Britain already left the EU at the end of January, it will still be part of the EU internal market and customs union until the end of this year. "Negotiators on both sides of the Channel must now urgently use the time to agree on a comprehensive free-trade agreement," Lang said.

During this transitional phase, the long-term relations between the EU and Britain will have to be renegotiated. A deadline to extend the transition period was missed by the British government at the end of June.

In order to simplify customs procedures as far as possible, the BDI has published a position paper with recommendations on the simplified trade of goods. "Simple rules would make trade massively easier, especially for small and medium-sized companies, and reduce bureaucratic burdens considerably," stressed Lang.