German industrialists have warned that British hopes of their support in Brexit negotiations are misplaced and could backfire with dangerous consequences for international trade.
Business leaders in Europe’s biggest economy are instead calling on Conservatives to rethink their commitment to leaving the single market, even though the party has doubled down on this promise in its election manifesto.
David Davis and Boris Johnson have repeatedly cited likely pressure from German exporters, such as carmakers, as a reason for thinking they can persuade European negotiators to maintain free trade access after Britain leaves.
But the theory is increasingly rejected by those whose support they need most – scepticism relayed most forcefully by Steffen Kampeter, the chief executive of the German employers’ federation, on a trip to the UK this week.
“The top priority of European business is the integrity of the single market; the second priority is making good business with the UK. We will see if there is a conflict, but the message is: do not harm the single market by cherry-picking deals,” he told a conference of British business leaders in London this week.
“It’s not the German carmakers that are directing the negotiations,” added Kampeter, who said he knew of no one who thought a trade deal within 18 months was possible and called for “rhetorical disarmament on all sides”.
An independent panel of economists that advises the German government has also intervened by proposing a plan that would avert such a cliff-edge scenario, whereby Britain would temporarily rejoin Efta – the trading block that consists of Switzerland, Norway, Iceland and Liechtenstein – at the point when its EU membership runs out and therefore preserve its membership of the single market.
Making such a “reverse Efta” a temporary stepping stone would avert irreparable damage to the British and German economy and allow Theresa May to satisfy the tabloid press’s demand for a swift exit, argued Albrecht Ritschl, one of the four authors of the letter.
May appeared to rule out this option in the manifesto by insisting Britain would leave the single market, but it is possible this could serve as the basis for a transitional deal that some Tories still support.
Ritschl said some leading Brexit advocates’ hopes of Angela Merkel forcing the EU to agree a free-trade deal before Britain officially dropped out of the EU in 2019 was based on a misunderstanding of the relationship between German politics and industry.
“Of course Germany has a strong export industry, but even in Berlin people have over the last two years come to realise that an enormous export surplus can be a weakness as well as a strength”, he told the Guardian.
“Above all, German industry knows that when it comes to dealing with international politics, you sometimes have to go with what the government decides. In any case, if businesses had to choose between maintaining exports to the UK and keeping the European Union together, it’s obvious they would go with the latter.”
Andreas Meyer-Schwickerath, director of the British Chamber of Commerce in Germany, said: “My impression is that German companies are getting very concerned about the tone that has been whipped up by the election campaign in the UK. If we don’t start tackling problems swiftly and pragmatically, then the whole debate could escalate beyond repair.” [...]
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