Peter Foster+ Your Authors @pmdfoster Public Policy Editor at the Financial Times. Formerly Washington DC, Beijing and New Delhi for the Telegraph. Opinions my own. Aug. 08, 2019 4 min read + Your Authors

Where is Germany on #Brexit ? Will looming manufacturing recession risk send Angela Merkel to the rescue?

Some quick thoughts after chats with dips, pols and industry. 1/Thread 

First the background...remember @DavidDavisMP saying the first port of call after Brexit would be Berlin?

As usual, chronically over-estimating Berlin's ability and willingness to go agains the EU27...BUT there was/is element of truth /2

Germany has been more "pragmatic" and cautious during #Brexit process than, say France.

Berlin fears cost of strategic rupture more than Paris, believes a 'no deal' would take longer to heal.

Recall Germany (with Dutch) fought France over April extension/3

So what does this mean for this next phase of #Brexit?

With @BorisJohnson in Number 10 and 'no deal' risk rising, will Merkel try to bounce fellow leaders into giving @MichelBarnier a new #Brexit mandate as @SteveBarclay demands? No, she won't.


That doesn't mean that Germany doesn't want talks - or isn't concerned by way Johnson has entered No.10, shrugged off back-channel offers to talk and set the 'abolish the backstop' precondition for any talks.

On that basis, it's clear Berlin won't make first move.


From what I hear, Berlin would be happy to talk "without preconditions"...

So talks begin with both sides clinging to opening positions - viz the EU wants to keep the WA, the UK wants to bin the backstop - and we see where we get to. /6

Now, it may well be that @BorisJohnson doesn't want to get sucked into a negotiation that probably (logically at leaset) ends with a tweak to backstop (time-limit, time-table, exit mechanism tweak) that enable Geoffrey Cox to change advice and (who knows) a deal to pass. /7

But that is the reality, as I understand it, of the German position - and by extension, if that place can't be reached - is also keen to find other ways to avoid 'no deal'. (Long transition,
A50 Extension for a GE etc) /8

But none of the above should be read (as so often is in UK) as a simplistic idea that the Germans will "blink" or respond to "blackmail" or ultimately do a deal that breaks EU unity or weakens the single market.

The history of the Cameron/May negotiations is a good guide. /9

It's the old thing that exasperates German officials, people like David Davis saying Berlin will strike a deal to save the German carmakers out of "economic self-interest"...when Germany sees EU SM preservation as precisely that: economic self-interest /10

Talking to business groups and people in the Bundestag connected to Brexit I'm afraid I hear certain fatalism on 'no deal'

"If that's what the Brits really want, there is a limit to what we can do to stop them."

"If it happens, we'll deal with it"/11

That means, biz groups say, doing the paperwork, paying the tariffs and partly re-orientating supply chains back inside the EU single market at the UK's cost. /12

Lastly, does the looming manufacturing recession (per y'day's data) change the weather in any way?

Germany's economy is facing mixture headwinds, from Brexit risk, from US-China trade war and Iran uncertainty... some warning lights are blinking. /13

But you need to keep that in perpsective, one Mittelstand biz group told me y'day.

The bad numbers are still fairly sectoral and Ger Govt still sees growth of 0.5% this year, 1.5% in 2020...hardly the kinds of numbers that bring governments to heel /14

And in any event, the UK should heed it's own lessons.

The UK Government is accepting the economic damage of a 'no deal' #brexit, so why wouldn't Germany accept the (far smaller) damage of defending its own political constructs? /15

It's that same old problem of UK politicians somehow forgetting that other countries have politics too.

Industry groups tell me UK politicians and businessmen were sent to pressure them to tell Merkel to be pragmatic. They always failed. /16

As one German biz group who was lobbied by both British govt and industry put it to me recently.

"The idea that business was going to demand such a deal; it is just not on the table politically and it never was." /17

In summary: yes, Germany is in many respects 'dovish' and cautious on #Brexit, and esp. a 'no deal' Brexit.

But don't mistake that for weakness, or a willingness to fold on key issues of principle.

Recent history says, when forced to choose, Germany choses the EU. 18/ENDS

You can follow @pmdfoster.


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