German GDP will be reduced by a quarter percentage point by the UK's plans, a report by the IW said, based on an assumed permanent 10% fall in the pound against the euro, and growth of only 0.5% in the UK, assuming a 'Brexit effect' of -1.5%, in 2017.
This would reflect a 9% fall in German exports to the UK, and a 3.5% fall in imports from the UK to Germany, IW said.
If the UK takes a 'hard' Brexit approach then the result is likely to be worse, with poorer trade rules, a drop of 0.5% in UK GDP, and a potential 20% fall in the pound against the euro leading to a 0.5% fall in German GDP. A softer Brexit plan could ease this to a 0.14% drop, it said.