As I See It: Terry Murden
Boris Johnson may be struggling to convince increasingly sceptical voters that he can pull off a deal with the EU, but help may be at hand from its biggest economy.
Manufacturing output is at a seven year low in Germany, edging the country closer to recession. A recent conference, organised by the British Chambers of Commerce representative in the county, concluded that a no-deal Brexit should be avoided under all circumstances as it would cost the German economy billions of euros.
The UK is Germany’s largest export market in Europe with more than 20% of all its exports heading across the Channel. In addition, almost all exports to Ireland also go via the UK.
A no-deal Brexit with customs barriers, regulatory diversion and uncertainty around immigration will cost the German economy around 1% of GDP with potentially 200,000 job losses, and Alex Altmann, a co-chairman of the BCC in Germany, warns that that the country could move into a recession in the fourth quarter of this year.
Securing a deal with the UK might just help head off such a scenario and he points out that German Chancellor Angela Merkel has pledged to “fight to the last hour” to prevent the UK crashing out of the EU without a deal.
Mrs Merkel has said that she is looking forward to a good working relationship with Mr Johnson and hopes Britain and Germany will remain “bound by close friendship in the future”.
She does so, however, as one of the EU’s staunchest supporters who is concerned that Britain’s exit could lead to a break up of the bloc.
Dr Katharina Karcher at Birmingham University says that on the one hand Mrs Merkel uses every opportunity to defend the European project and highlights that no country can have the benefits of membership without embracing the duties and responsibilities that this involves. On the other hand, she has warned against a ‘rigid approach to Brexit talks’.
There are also signs of softening from new EU commission president Ursula von der Leyen who has hinted that the EU is open to give the UK more time and will extend the Brexit deadline again. Opinion in Paris is a little less yielding. France’s Europe minister, Amélie de Montchalin, has rejected Mr Johnson’s demand to change the withdrawal agreement and President Macron has stuck to the no-change policy despite the change of UK prime minister.
With Germany potentially offering an olive branch and France digging in its heels it may now come down to who blinks first, but a view gaining traction around the EU is that fears of the impact of No Deal on their own economies will force EU leaders into making concessions allowing Mr Johnson to get Brexit done – with a deal.
The new Prime Minister will need all the help he can get. Even the Brexit-induced slump in the pound is ceasing to benefit Britain’s exporters. The latest CBI SME Trends Survey of 268 small and medium-sized manufacturers, reveals that optimism about export prospects for the year ahead have worsened to the greatest extent since the financial crisis (April 2009).
Activity was weak among SME manufacturers, with both domestic and export orders falling at the quickest rates in several years (since April 2013 and October 2015 respectively).