In World Economy News 27/06/2016
The British government should be given time to weigh the consequences of an exit from the European Union, a close aide to German Chancellor Angela Merkel has said in the first sign that Berlin didn’t see Britons’ vote to leave the bloc as irrevocable.
“Politicians in London should have the possibility to think again about the fallout from an exit,” Peter Altmaier, the chancellor’s chief of staff, told a consortium of German regional newspapers in an interview to be published Monday.
To leave now would be “a deep cut with far-reaching consequences” and the process of reapplying for membership would take a long time, Mr. Altmaier added.
Since the result of the U.K. referendum became clear Friday, Ms. Merkel’s calm reaction has stood out among those of other EU leaders. While French President François Hollande and the heads of the EU’s main institutions said Britain should trigger its departure as soon as possible, Ms. Merkel insisted that London shouldn’t be pressured into leaving the bloc quickly, and that any future arrangement should safeguard the U.K.’s strong trade, security and political ties with the EU.
A German official familiar with the chancellor’s thinking went further Sunday, saying Berlin assumed that the U.K. would leave but would prefer it if this outcome could be avoided altogether. Any scenario that would threaten the political and economic stability of the U.K. wouldn’t be in Germany’s interest, the official added.
A rupture of trade ties to the U.K. would cost Germany dear. Last year, German exports to the Britain totaled 60.7 billion pounds, almost twice as much as British exports to Germany and almost double Chinese and U.S. exports to the U.K. according to British trade statistics.
Britain was Germany’s third largest export market last year after the U.S. and France, according to Germany’s Federal Satistics Office.
The suggestion that the outcome of Thursday’s referendum may not be the last word about the U.K.’s EU membership — or that if it is, London should be offered a generous form of partnership to replace it — comes as Britain faces prolonged political, economic and financial uncertainty.
Prime Minister David Cameron’s announced resignation, an insurgency within the opposition Labour Party, and the absence of a clear leader among euroskeptics in the ruling Conservative party to lead divorce negotiations with Brussels have left the country’s political establishment effectively headless.
Berlin’s wait-and-see approach to the British referendum could “allow early elections in the U.K. to take place that could give someone a fresh popular mandate to override the referendum” and salvage Britain’s EU membership, said Ulrike Guérot, professor for European Policy and the Study of Democracy at Danube University in Krems, Austria.
“The alternative, as anyone who has gone through a divorce can tell you, would be a very messy and lengthy split,” she added.
Since Friday, several European leaders have urged the U.K. to invoke Article 50 of the EU Treaties, which would trigger the complicated legal and technical process of disentangling the country from the bloc. French President François Hollande and other French politicians have led these calls and were echoed by the heads of the EU’s main institutions, European Commission President Jean-Claude Juncker and European Parliament President Martin Schulz.
Britain should invoke the mechanism as soon as next Tuesday, when European leaders gather for the European Council meeting in Brussels, Mr. Schulz told German weekly Bild am Sonntag.
Dragging out the exit procedure would lead to “even more uncertainty and could threaten jobs…That is why we are demanding that the British government delivers now. The summit this coming Tuesday would be an appropriate timing for that,” he said.
Even in Germany, senior members of the Social Democratic party, junior partner in Ms. Merkel’s coalition, have joined the chorus. On Saturday, Foreign Minister Frank-Walter Steinmeier joined his counterparts from the EU’s founding members in urging the U.K. to kick off departure proceedings as soon as possible.
“The British people have now decided that they would go. We won’t hold talks about what else we could now offer the British so that they stay,” Social-Democrat Sigmar Gabriel, Germany’s economics minister, said in an interview with daily Handelsblatt released Sunday. There was no “half-membership,” he added.
Advocates of a swift and clean British exit say prolonged uncertainty over whether the U.K. will leave or remain in the EU could unleash severe market volatility and force companies in Britain and on the continent to freeze investments and expansion plans as they await a resolution.
They also fear a lenient treatment of Britain — especially any suggestion that it may now be allowed to renegotiate a less onerous version of its EU membership — would only embolden other euroskeptic, anti-establishment insurgencies from France to the Netherlands, and Austria, where populists groupings have called for their own membership referendums.
Speaking on Saturday, Ms. Merkel made clear she had no such concern.
“I don’t think the negotiations (about the U.K. leaving the EU) should have a deterring effect,” she told a press conference. “There is no reason to be particularly nasty during these negotiations. They should be conducted in a rational way.”
In her friendly approach, Ms. Merkel is heeding calls from her country’s business community. If Britain couldn’t be kept in the EU, they have said, it should be offered a different partnership with generous trade terms.
On Sunday, Johannes Teyssen, chief executive of energy group Eon SE, told the Bild daily “as much as possible, we should keep Britain into the single market for goods and services.”
But as he — and several German officials — also pointed out, this would require concessions from Britain. For nonmembers to access the EU’s single market, they must allow citizens of the bloc to live and work in the country as they please, something that could be difficult for London to accept given British voters’ impatience with high immigration from the EU in recent years.
Source: Dow Jones
