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Germany says UK will face costs from Brexit

German Finance Minister Olaf Scholz, center, looks at European Commissioner for Economy Paolo Gentiloni, front left, and European Central Bank Vice President Luis de Guindos, front right, as he arrives to an European Finance Ministers meeting at the Europa building in Brussels, Tuesday, Jan. 21, 2020. (AP Photo/Francisco Seco)
German Finance Minister Olaf Scholz, center, looks at European Commissioner for Economy Paolo Gentiloni, front left, and European Central Bank Vice President Luis de Guindos, front right, as he arrives to an European Finance Ministers meeting at the Europa building in Brussels, Tuesday, Jan. 21, 2020. (AP Photo/Francisco Seco) (Copyright 2020 The Associated Press. All rights reserved.)

DAVOS – German finance minister says he is confident that his country won’t suffer from Brexit but that Britain will inevitably face “consequences” from its decision to leave the European Union.

At a panel at the World Economic Forum, Olaf Scholz said Britain’s financial sector won’t be as important to the EU after Brexit as it is now.

Britain is set to leave the EU in a week’s time but will remain within its tariff-free single market and customs union until the end of the year to smooth its exit.

Scholz said a non-member cannot have the same advantages as an EU member and that will be an important factor in upcoming trade discussions between the EU and Britain.

“That is something that will have to be balanced,” he said. “I think we will have solutions but, sure, there cannot be a special competitive advantage from being outside.”

Christine Lagarde, the new president of the European Central Bank, cautioned about the prospect of a “cliff-edge” Brexit moment at the end of this year.

Though Britain is leaving the EU with a withdrawal agreement, Prime Minister Boris Johnson has insisted that he won't be requesting an extension to the so-called transition period. That, in theory, means that Britain could leave Europe's single market and customs union at the start of next year with no trade agreement with the EU, which would mean tariffs and other impediments to trade.

“That is certainly a question mark,” she said.

Britain's Treasury chief Sajid Javid said this week that he's confident that a comprehensive trade deal with the EU covering goods and services can be negotiated by the end of this year. Many trade experts think that's optimistic as trade deals usually take years to thrash out.