Key German exporters have reaffirmed their allegiance to protecting the single market, warning Britain it can expect no help from them in the upcoming Brexit negotiations.
Leading German producers quickly sank the British government’s expectation that they would exert pressure on German Chancellor Angela Merkel to allow it continued and substantial access to the EU single market.
According to the Observer, two of Germany’s largest industrial groups declared that their chief concern is the protection of the single market for the remaining 27 EU member states, regardless of the effect that this may have on the British economy.
The industry bosses said that it was up to Prime Minister Theresa May’s government itself to mitigate the economic fallout following the UK’s withdrawal from the European Union.
“Defending the single market, a key European project, must be the priority for the European Union,” President of the Federation of German Industries Dieter Kempf said.
“Europe must maintain the integrity of the single market and its four freedoms: goods, capital, services, and labor.
“It is the responsibility of the British government to limit the damage on both sides of the Channel. Over the coming months, it will be extraordinarily difficult to avert negative effects on British businesses in particular.”
The news reportedly came as a surprise to the Conservative government. Just over a week ago, when he was asked whether the German industrial lobby would put pressure on the German government to grant the UK broader access to the single market, Brexit secretary David Davis replied that “that’s where it will end up.”
“I mean it’s not just the German car industry, it’s Bavarian farmers, French farmers, Italian white goods manufacturers, you name it,” Davis added.
“The balance of trade basically is 230 billion from us to them, 290 billion from them to us. They have a very strong interest in getting a good deal at the end of the day on all sides on trade.”
Hey #brexit voters .. NO the German car industry will not demand that the UK has free access to the single mkt .. we did tell you!
— liberalisland (@LiberalIsland) July 9, 2017
However, Ingo Kramer, president of the Confederation of German Employers’ Associations, emphasized that even though the UK remains an important business partner, the protection of the EU market takes precedence.
“The single market is one of the major assets of the EU. Access to the single market requires the acceptance of all four single market freedoms,” Kramer said.
“The UK will remain a very important partner for us, but we need a fair deal for both sides respecting this principle. The cohesion of the remaining 27 EU member states has highest priority.”
The British establishment, however, still hopes that German industrial exporters will withdraw their backing of Merkel in due course during the Brexit negotiations.
Former Director-General of the British Chambers of Commerce John Longworth, who campaigned for Brexit, said: “The European project is so important to the Germans politically and economically, that the German political establishment are prepared to sacrifice even their own car industry for that outcome.
“That may not stand up to scrutiny when it begins to bite, however. We are their biggest export market. And many businesses in countries outside Germany won’t share their view, either. There will be pressure on governments to compromise.”
Nevertheless, some commentators point out that even if German business supported a softer stance on the UK, it is unlikely that this would translate into actual policy on the part of Merkel’s government.
For instance, Charles Grant, director of the Centre for European Reform think tank, said that “many of the key policy-makers in Germany do not care what the business lobbies say.”
“They care about the principles. One of their principles is that the single market is indivisible. Another is that the British must be seen to pay a price for Brexit, doing less well outside the EU than in it.”