Brexit is a nuisance for Germany and the EU

The British political media today are focused, bordering on obsessed, with the German “charm offensive” of finance minister Phil Hammond and hapless Brexit gofer David Davis. I emphasise the word obsessed, as that is how the UK’s Brexit stance is aptly described by Almut Möller, Berlin office chief for the European Council on Foreign Relations.

Möller’s compatriots are far from obsessed with Brexit. German domestic coverage of Hammond and Davis’ visit, and their joint article in the Frankfurter Allgemeine, aimed as they are at German business leaders in an attempt to undermine the negotiating position of the European Commission, Council and Parliament, is pretty low-key.

Hammond and Davis’ awayday in Berlin may have a small effect on some of Germany’s exporters, but I do not see the latter lobbying their government and EU bodies to accept English pleas for a so-called ‘Canada plus plus plus’ deal that includes financial services in the same way as free trade in goods. There may be a little room for manoeuvre on regulatory equivalence in limited areas of financial service provision, as was acknowledged by the Commission’s lead Brexit negotiator Michel Barnier, but this will be seen as an instantly rescindable privilege, with the EU making and enforcing the rules, and holding all the cards.

Any Brexit deal will necessarily be “bespoke”, to use the UK government’s favoured and intentionally misleading term, but the chances of it being substantively different from the EU-Canada Free Trade Agreement (CETA) are vanishingly small. If the EU were to accept England’s demands, Canada, Japan and others would be most unhappy (and possibly litigious) at such favouritism toward a third country little different from their own.

For Germany and the wider EU, Brexit is seen as a lose-lose situation for all concerned. Given that England has set its collective mind on such economic, political and cultural self-harm, the EU will follow the legal and bureaucratic process as best it can, minimising damage to the union and its member states. “Brexit is a nuisance,” as Möller says, but it is not the only challenge facing the EU.