BERLIN, Jan. 5 (Xinhua) -- The free trade deal agreed by the UK and the European Union (EU) on Christmas Eve would significantly lessen the negative economic impact of Brexit, according to a study published by Germany's Ministry for Economic Affairs and Energy (BMWi) on Tuesday.
"The agreement on a comprehensive agreement between the EU and the UK without tariffs and without quotas is a good signal for the economy in Germany, the EU and the UK," said Minister for Economic Affairs Peter Altmaier in a statement.
However, Germany's trade with the UK had already declined before the withdrawal of Britain from the EU, according to the study by the ifo Institute in cooperation with the Kiel Institute for the World Economy (IfW Kiel) on behalf of the BMWi.
Although the best theoretical economic scenario was for the UK to remain in the EU's single market, Altmaier stressed that "German companies have already prepared for the UK's withdrawal from the EU single market."
Goods traded between Germany and the UK continuously declined since the Brexit referendum in 2016, the study found. German car manufacturers and the country's chemical industry were particularly affected by dropping exports to the UK.
Part of the reduced trade with the UK would be compensated by increased trade between Germany and other EU countries as well as third countries. China and the United States would become "even more important sales markets for Germany, as a result of the Brexit," the study noted.
After months of negotiations, the EU and UK agreed on a comprehensive agreement shortly before the end of the Brexit transition period. The EU-UK Trade and Cooperation Agreement provisionally entered into force on Jan. 1.
Even with a comprehensive agreement in place, the study estimated that Germany's real GDP would fall by around 0.14 percent, equivalent to around 4.9 billion euros (6.01 billion U.S. dollars), and by up to 0.96 percent in the UK as a result of Brexit.
"The immediate effects of Brexit on future trade link with the UK are likely to be smaller than many feared," said Altmaier.