William Cook

How Brexit will change Germany

How Brexit will change Germany
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In the summer of 1990, the editor of The Spectator, Dominic Lawson, went to interview Nicholas Ridley, Margaret Thatcher’s Secretary of State for Industry, and asked him about the drive towards European Monetary Union. ‘This is all a German racket designed to take over the whole of Europe,’ said Ridley. ‘I’m not against giving up sovereignty in principle, but not to this lot. You might as well give it up to Adolf Hitler, frankly.’

The consequences of these comments were seismic. Thatcher demanded Ridley’s resignation, she resigned herself a few months later, and for a quarter of a century thereafter successive Prime Ministers did their utmost to distance themselves from Ridley’s remarks. Lots of Britons shared his worries about German domination of the Euro, but comparing Helmut Kohl with Hitler was absurd and tasteless. By voicing legitimate concerns in such inflammatory terms, Ridley helped to marginalise the Eurosceptic cause for 20 years.

Twenty-seven years later, Ridley, Kohl and Thatcher are all dead, but Anglo-German relations are still tainted by that explosive interview. German diplomats and politicians remain acutely sensitive to the charge that the EU is a Teutonic plot to achieve by stealth what their forefathers failed to achieve in two world wars, and it’s this fear of being cast as Europe’s bully boys which means Germany will play no active role in the Brexit negotiations.

Germany has always been the EU’s most powerful economy, and Britain’s departure leaves the Bundesrepublik in an even more dominant position. Yet far from using this enhanced clout to steer the Brexit negotiations in a direction which would suit German industry, Germany’s leaders are now even more anxious than ever not to be seen throwing their weight around. I’ve spoken to Germans from the civil service and across the political spectrum, and they all say the same thing: Brexit is now purely a matter for the European Commission.

The reason Germany is so keen to take a back seat is that European unity, not British trade, is Germany’s main concern. Ridley was right to say that Britons find it intolerable being bossed about by Germans. What he didn’t mention was that other Europeans feel much the same. Economically the other members of the EU depend on Germany but they don’t like to admit it and so, in some respects, the EU’s richest, most populous nation actually has less diplomatic leverage than its smallest, poorest states. It makes no difference if Germans want to carry on selling tariff-free cars to Britain – to maintain European harmony, especially after Brexit, Germany must avoid the slightest suspicion that it’s bossing its EU partners around.

So what will be the consequences of this back seat stance, for Germany and Britain? Most probably, a tougher exit deal than many German industrialists would care for. The Germans I’ve spoken to all seem resigned to a hard Brexit, with no concessions. In means In, Out means Out, and the integrity of the Single Market is sacrosanct. Sure, new tariffs may hurt German exports in the short term, but if the Single Market remains intact it’s probably a price worth paying. And in any case, they argue, German exports aren’t particularly price sensitive. Britons buy German goods because they’re reliable, not because they’re cheap.

Germans want some sort of deal and they’re fairly confident Barnier will work something out, but the one issue which they fear may cause the breakdown of these talks is British exit payments. The way the Germans see it, Britain has made prior commitments to the EU which we need to honour before anything else can be resolved, and my German contacts regard this as an area where the two sides are still a long way apart.

And what about Germany’s role in Europe after Brexit? Ironically, it seems the main result of Britain’s departure will be to make the Germans more Eurofederalist – not because they want to be, but because Brexit will inevitably propel Germany into a closer relationship with France. Macron wants to drive European integration at a faster pace than Merkel, and while the Germans will resist French attempts to pool French debts with German surpluses, without the British there to apply the brakes the EU juggernaut will now move up a gear. One of the unintended consequences of Brexit is that, far from initiating the break-up of the EU, it will most likely bind its remaining members more tightly together.

Ridley was right to worry about British sovereignty but he was wrong about German motives – Germany has always been a reluctant leader of the EU. Monetary union wasn’t a German racket to take over Europe - it was actually a French attempt to control a reunited Deutschland. Far from seeking to dominate the EU, Germany would love its EU partners to prosper – it would save the Germans a lot of money, and a rising tide lifts all boats. So long as we remained in the EU, Germany could steer a middle course between France and Britain. Now we’re out, it’s the French who stand to gain. Europhobes are wide of the mark when they call the EU the Fourth Reich. A more accurate caricature might be to call it the Sixth Republic.