In World Economy News 29/08/2016
German Vice Chancellor Sigmar Gabriel said the U.K.’s vote to leave the European Union is creating a sense of instability and will lead to “big problems” if policy makers mishandle the Brexit process.
While Britain’s exit “won’t hurt us economically as much as many fear,” it’s “a huge problem politically,” Gabriel, who leads Germany’s Social Democratic Party, said at a town hall-style event in Berlin on Sunday. “The world is looking at Europe as an unstable continent.”
German Finance Minister Wolfgang Schaeuble said at a separate event that while he was “quite stunned for a few hours” by the result of the Brexit referendum on June 23, “it seems that it’s taking the British months because they don’t know what they’ve done. They don’t know how to deal with this.”
Gabriel reinforced Chancellor Angela Merkel’s message that Prime Minister Theresa May can’t expect to cherry-pick the EU’s advantages once the U.K. triggers the bloc’s exit clause and talks on a new relationship begin. For her part, Merkel spent last week sounding out fellow EU leaders ahead of a summit next month to map the 27 remaining countries’ response to Brexit. She plans to meet French President Francois Hollande and Italian Prime Minister Matteo Renzi on separate trips this week.
“We can run into really big problems if we organize Great Britain’s exit badly,” said Gabriel, whose party is Merkel’s junior coalition partner. “It will be important that we don’t allow Great Britain to keep Europe’s nice things and reject responsibility.”
German Deputy Foreign Minister Michael Roth said Saturday that negotiations between the EU and the U.K.“will be very difficult.” If the U.K. wants the benefits of the common market while restricting the right of other EU citizens to work in Britain, “they will find there is no a la carte cooperation,” Roth said in Berlin.
Merkel’s Woes
The EU has said negotiations with the U.K. won’t start until Britain formally declares its intention to leave the bloc. Roth said Germany is hopeful that the U.K. government will “send us the letter soon” so that Brexit discussions can begin. There’s “no blueprint in the drawer” on a way forward, he said.
As Merkel faces opposition to her refugee policy abroad and at home, she sought to focus the debate on measures to boost economic growth and fight youth unemployment in some parts of Europe.
“People will accept Europe only if it holds out the promise of prosperity,” Merkel told reporters on Friday before meeting government leaders from Poland, Hungary, Czech Republic and Slovakia in Warsaw. “Britain’s exit isn’t just some event, but rather a deep watershed in the history of European Union integration.”
Source: Bloomberg
