What a Brexit would mean for Germany

I have heard it several times already. “So what is all this Brexit-talk about?“ my German friends ask, “why do the Brits want to leave?” “Why to they always need to get a special deal (an “Extrawurst”, in German)? Can they not just stick to the rules?” they ask. Some of these friends then concluded that it would be best if the UK were to leave the European Union. “Sollen sie doch gehen,“ they said. Let them leave.

This is only one part of the story. It’s not as if Germans don’t care whether the UK exits the EU. Once you leave the superficialities aside and really start talking to people, many of them admit that it’s not a great prospect to imagine the EU without the UK. Germany, as one of the core countries advertising deficit reduction and balanced books, is quite aware that a British exit would shift the balance in the EU.

Not only would we lose a country that has never shied away from making it’s point (and by that often publicly stating what Germans would not dare to state). Inevitably, without the UK, Germany would be one of the last men standing with regards to the adherence to existing deficit rules and the resistance to more financial burden sharing.

Due to our history, Germans don’t like to lead in Europe, a fact that – because of the size of the country and its economy – has recently been more hindering than helping. Because of the past, Germany still fears of being perceived as being dominant by other European countries, France in particular.

A British depature would unquestionably spell the end for the alliance between Germany, France and the UK that has governed the EU in the past. Instead, we would see a power shift towards Southern European countries such as Italy, Spain and Portugal – and with that a change in attitude towards fiscal planning, the reform of the Euro and greater integration.

Without the UK, Germany risks being accused of imperialism and dominance when advocating structural reforms and putting the necessary pressure behind these. Germany fears to be “left alone with all these Southerners,” people in Berlin say quietly. Given that there is more trouble ahead – the euro urgently needs fixing, Greece´s debt problem is still unsolved, the EU still has not made the structural reforms that are needed for the continent to remain competitive – it’s an unpleasant idea that Germany might have to go it alone.

Admittedly, the UK is not part of the euro and is thus not directly involved in currency isses. Nevertheless, the country has been a strong voice for reforms and competitiveness which is part of the message that Germany wants to convey. Taking into consideration that there’s still a deep divide between the Northern euro-members and the Southern euro-members, one needs countries like the UK to strike a balance. Of course, I’ve also heard the counter argument: That the UK will never want more, but less integration, and that it can never play the role it should because of it’s non-participation in the euro, in the Schengen-agreement and the Dublin compromise.

A recent study by IHS has thus been arguing that a Brexit could – leaving aside the short-term economic shock – in the long run help the remainder of the EU to move forward. Howard Archer, IHS’s Chief UK and European economist, pointed out that the UK has, in the past, acted more like a brakemen, not as an enabler of further integration. A British exit and that of other member states who are resisting more integration could consequently lead to a core of European countries finally making the necessary steps and growing together, without disturbances from outside. The economic shock following a Brexit from the EU could cause enough pain among EU member states to force them to move forward.

I don’t find that argument too convincing. Europe has shown in the past that it needs strong leaders in order to make changes. Without the UK, there would be at least one voice less advocating for free-market ideas and reforms. Many people in Berlin, especially those working closely with Mrs. Merkel, are quite aware of this problem. But unlike in the spring when finance minister Wolfgang Schäuble toured the City in order to make the case for remain, or last January when Mrs. Merkel travelled to London, we haven’t seen any high profile visits from Germany in recent weeks.

Germans fear that an Obama-type-visit to London (where he warned that the UK would be at “the back of the queue” in case of a Brexit) might be perceived as interference and have a contrary effect on the British population. “There is no argument that hasn’t been made yet,“ a German politician close to Mrs. Merkel and her party told me last week in London. “It would be seen as interference, nothing else.” Because of that, Mrs. Merkel underlined at the G7 summit in Japan, it was the decision of the British people to vote for or against Brexit. (Annotation: On Thursday, June 2nd, Mrs. Merkel and other European leaders made an unexpected intervention. “It’s in all of our interest, but also in British interests, to say that we’re putting all of our weight into a negotiation as part of the EU,” she said, according to the Financial Times).

The threats made by the French economic minister and by Jean-Claude Juncker, the head of the Commission, were “not helpful,“ the politicain stated. A British exit could contribute further to the erosion process that the EU is currently in. “Our economy is at it’s best whereas the French one is at it’s worst”, he said. Without the UK, differences like these could become more pressing. That`s also why the UK should play a more active role in Europe, did it vote to stay. “If they stay, David Cameron needs to make a strong confession for Europe”, the politician said.

Is that realistic, given that the prime minister needs to heal all those old wounds that have been reopened during the referendum-campaign? We will see.