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Brexiters are ‘deluded’ about divorce with Germany

Published: October 15, 2016, 8:55 pm

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    Brexiters were reassuring themselves that trade with Germany, Europe’s leading country, would not lead to a messy divorce between Britain and the European Union. Britain is Germany’s fifth-largest trading partner and its third-largest export market after America and France. But they might be somewhat optimistic.

    Some 750,000 German jobs depend on exports, and Germany’s trade surplus with Britain is substantial. And while Britain is the biggest foreign investor in Germany, German firms employ some 400,000 people in the UK.

    Britain had therefore hoped that German carmakers would lean on Angela Merkel, the German chancellor, in future negotiations with the EU as industrialists usually have the last say in Germany.

    Although Lutz Goebel, president of the lobby representing the family-owned firms, says Merkel is increasingly deaf to their concerns, because her coalition has enacted a minimum wage, early retirement at 63 for certain workers, quotas for women on corporate boards and the like, most industry bosses feel differently.

    Her drive to convince the EU to impose sanctions on Russia after its invasion of Ukraine was very unpopular and a pro-Russian lobby called the Ost-Ausschuss (Committee on Eastern Europe) opposed the move. But the Federation of German Industry, an affiliated but much larger lobby, caved in, “in the interest of maintaining the international order” to end the controversy.

    Brexit is raising similar questions of principle on foreign trade at the Association of German Chambers of Commerce and Industry, of which almost all German firms are members. The economic consequences of Britain leaving the single market is not quite clear yet and moreover the integrity of a single market, should Britain or any other state set new conditions for participating, is still being debated.

    But the emphasis on principle extends to most industrialists. Matthias Wissmann, president of the German Association of the Automotive Industry told the Economist that keeping the European Union together “was a priority”. Britons are deluded if they think German carmakers are not taking a long-term view, he said.

    Contrary to the illusions of some in Britain, Merkel and German industrialists are in agreement that political and business interests should be coherent. Former chancellor Gerhard Schröder used to carry the nickname Genosse der Bosse [fat cat friendly], but it suits Merkel too.

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