We’re your friend, but Brexit will be tough, Germany tells UK

20 March 2017 1:22pm

30 January 2017. By Simon Taylor

Germany’s political and business leaders say they are firm in their belief that Brexit will have profound economic consequences for the EU and the UK. But don’t expect Berlin to cut the UK any slack.

Senior German lawmakers who spoke to MLex last week were adamant that the EU is heading for a painful, hard Brexit and that the UK government had failed to come clean about the costs.

But none of that will affect the will, from all sides of the German political firmament, to defend EU unity and the integrity of the single market. Expect Berlin to be combative in its approach to Brexit.

For evidence of this approach, look no further than the German response to a speech given by Theresa May on Jan. 17, in which the UK prime minister set out her Brexit priorities.

The speech may have played well for May at home, but the German politicians who spoke to MLex complained that May had given little indication of where the UK was prepared to make tradeoffs.

Detlef Seif, deputy EU spokesman of the center-right CDU-CSU, said the speech clarified “nothing” and was “for domestic political consumption.”

The speech also stumped Axel Schäfer, deputy leader of center-left SPD parliamentarians, who said that May had acted as though there could be a “win-win situation” for the EU and Britain at the end of the Brexit negotiations.

“With 100 percent certainty, we will end up in a lose-lose situation,” Schäfer said.

The reason German politicians believe the UK and the EU face such severe economic consequences from Brexit is because the terms of the exit deal will inevitably mean that Britain will lose its rights to trade freely with the EU.

This is the logical consequence of May saying that the UK will no longer be a member of the single market and it wants out of the customs union. And it has left German’s political class puzzled.

Seif stresses that the UK cannot expect to pick and choose parts of EU membership to suit itself.

The UK may have been able to indulge in “cherrypicking” in the past when it was a member of the EU, Seif says — the decision to stay out of the euro, steering clear of the Schengen visa-free travel area and enjoying some opt-outs from justice and home affairs laws had been the UK’s prerogative.

But that will change: Seif says there will be no cherrypicking in exit negotiations.

This undermines the argument of UK politicians, including Foreign Secretary Boris Johnson, who have said that the UK would get a good deal on trading terms for the single market because German exporters would want to protect their UK sales.

Defending the four freedoms

Germany’s political and business leaders are united in wanting to defend the unity of the EU and to resist any attempt to retain the benefits of EU membership without accepting any the responsibilities — including access to each side’s labor market.

Which is why May’s insistence that Britain will end the right to free movement to the UK of EU citizens has become a stumbling block for Berlin.

German Chancellor Angela Merkel said in a recent speech to the Association of Germany’s Chambers of Commerce and Industry in Cologne that full access to the EU’s single market could only be given if the bloc’s “four freedoms” were accepted — the free movement of goods, capital, services and people.

Anything less could see other members attempt to secure the benefits on a membership on a selective basis — picking and choosing which of the four freedoms they want to embrace. That would mean placing the “great advantage” of the internal market at risk, Merkel said.

That is a risk that must be avoided, she said, arguing that politics and business should work together.

And for now, the chancellor’s tough stance has received the support from German business that she had been looking for.

Business backing

Dieter Kempf, president of the Federation of German Industries, said in a speech the same day that for “politicians in Brussels and Berlin, there should only be one motto for the negotiations: Keep Europe together and strengthen it.”

The four freedoms were elemental to the EU, and there should be no new barriers to the freedom of movement for goods, services, capital and people, Kempf said.

The view from Germany is that Brexit is one more geopolitical crisis facing the EU, adding to the influx of refugees and the arrival of a populist in the White House. In facing these perils, Europe must not lose its nerve.

As Merkel said in her Cologne speech, the referendum result had left many in Germany “shattered.” But while Germany wanted to maintain the best possible relations with the UK post-Brexit, this could not come at the price of weakening the EU or undermining the single market.

Merkel talks of giving the UK a “fair” deal on Brexit. But the word from Germany is that there should be no illusions: Brexit will be tough.

Brexit Special Report