German fiscal policy chief: EU unity outranks tariff-free exports

By on 25/06/2017
Torsten Arnswald, head of the fiscal policy division, Federal Ministry of Finance, Germany

The head of Germany’s Fiscal Policy Division has warned that the country will prioritise EU unity and the core principles of the Single Market over its short-term interest in exporting goods to the UK, directly challenging the ideas underpinning the negotiating strategy of Britain’s Brexiteers.

Vote Leave campaigners, including the UK’s Brexit secretary David Davis, have repeatedly argued that countries enjoying a trade surplus with the UK will be willing to compromise Single Market principles – most notably the free movement of labour – in order to secure continued tariff-free access to UK markets. “Post Brexit a UK-German deal would include free access for their cars and industrial goods, in exchange for a deal on everything else,” Davis said in May last year.

But Torsten Arnswald, who oversees fiscal policy in Germany’s Federal Ministry of Finance, told Global Government Forum in an exclusive interview that “there’s been a fallacy maybe in [recent] months that national interests would or could be dominant in terms of Brexit negotiations. For the German industries and the German economy, it seems much more relevant that we keep together the European common market.”

The UK’s Brexiteers have also assumed that Britain will be able to broker the key elements of a Brexit deal with France and Germany, leaving these countries’ leaders to get other EU member states on board. But German Chancellor Angela Merkel has made clear that the EU will only negotiate as a bloc, diluting the interests of net exporters with those countries running a trade deficit with the UK. “Until now, to be honest, the effect of Brexit has been to unify the remaining European countries rather than to split them or sow seeds of division,” said Arnswald.

Speaking before the UK’s June general election – which left the PM severely weakened, and thus a less credible negotiating partner for the EU – and the start of Brexit talks, Arnswald made clear that EU unity is Germany’s top priority. Its second key goal, he added, is to agree “a smooth divorce from the United Kingdom. I think that also would determine now the negotiations”.

Arnswald’s comments echo statements by Merkel, who has repeatedly challenged arguments such as those of Brexiteer and UK environment secretary Michael Gove – who said during the 2016 referendum campaign that “it would be very difficult for any German finance minister to say to BMW I am afraid you are going to have to lay off workers because I want to punish the British for being democratic by erecting trade barriers… that won’t happen.”

Brexiteers have traditionally dismissed comments such as Arnswald’s, arguing that they represent a negotiating position rather than a ‘red line’ – but as the talks begin between the UK and the EU bloc, there is as yet no sign that individual countries are willing to set aside the principles of the Single Market in order to protect their exporting industries.

Click here for the full interview with Torsten Arnswald, head of the Fiscal Policy Division in the German Federal Ministry of Finance

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See also:

Exclusive interview: Torsten Arnswald, Head of the Fiscal Policy Division, Federal Ministry of Finance, Germany

Clock ticking for Theresa May as EU leaders stand firm on Brexit timetable

EU pledges Brexit transparency

Ripples around the world: Brexit’s implications for Europe and beyond

About Matt Ross

Matt is a journalist and editor specialising in public services, policymaking, government and management. He was the editor of trade title Civil Service World from 2008 to 2014, serving an audience of senior UK officials; and the features editor of weekly news magazine Regeneration & Renewal between 2002 and 2008, covering urban regeneration, economic growth and community development. He has also been a motoring and travel journalist, and now combines his role as editorial director of Global Government Forum with writing for other publications including The Guardian and Planning magazine.

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