Jonathan Saxty

Germany holds the key to a Brexit deal

(Getty images)

Boris Johnson failed to break the Brexit negotiations deadlock over dinner with European Commission president Ursula von der Leyen last night. But while the continuation of talks suggest that neither side favours no deal, something needs to give if a deal is to be reached. It’s here that Germany holds the key.

France appears to be the major obstacle to a deal, particularly over fisheries, but also over the level-playing field. France and the UK have similar-sized and structured economies; both are major military powers and maritime nations. Paris is more likely than Frankfurt to threaten London’s crown. 

But Germany – the ever-pragmatic manufacturing titan of the EU – will be the final arbiter of any decision. It is Germany which has frustrated French attempts at transforming the EU into a coherent geopolitical force. Meanwhile, Berlin has a more complex relationship with Russia than the average western European country, while its relationship with China is more influenced by the need to maintain trade ties.

Germany generally acts less in a spirit of passion and principle, so much as reason and pragmatism, even to the frustration of its allies. True, Chancellor Angela Merkel told the Bundestag her Government was willing to let negotiations collapse if Britain continued to reject the EU’s position. But near-landlocked and export-oriented Germany could be unwilling to risk the economic hit to itself or the EU of no deal. Such an outcome could cost the EU €33bn (£30bn) in annual exports, with Germany suffering the biggest blow (€8.2bn; £7.5bn), followed by the Netherlands (€4.8bn; £4.4bn) and France (€3.6bn; £3.3bn).

A recent development is instructive here in showing what could happen over the next few weeks. A revised plan – negotiated by the German presidency of the Council of the EU – now means a solution could be (temporarily) reached between the EU on the one hand, and Hungary and Poland on the other – the latter having objected to tying funds in the EU recovery fund and budget to the ‘rule of law’.

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