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Brexit could strengthen Germany

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The headquarters of the European Central Bank in Frankfurt, Germany could benefit from Britain leaving the European Union. Reuters

BERLIN (Reuters) – Britain’s departure from the European Union could strengthen the bloc’s political integration and make Germany more attractive as a business location, German Deputy Finance Minister Thomas Steffen said yesterday.

At their first meeting in Brussels on Monday, British and EU negotiators agreed on a timetable for the Brexit talks. Both sides stressed their goodwill but also acknowledged the task’s huge complexity and tight deadline.

“The decision by the United Kingdom to leave the EU is unfortunate,” Mr Steffen said in the editorial of the finance ministry’s monthly report.

In the forthcoming negotiations, the remaining EU member states will be faced with the challenge of preserving the unity of the EU-27 and the coherence of the EU’s internal market while also limiting the damage to citizens and businesses, he said.

Steffen said that the EU-27 were determined to remain united and to put future relations on a new common basis. “The Brexit process could also bring opportunities for a stronger EU and for Germany as a business location,” he added.

Germany has thrown its hat into the ring to host the London-based European Medicines Agency and the European Banking Authority following Britain’s departure from the EU, though diplomats say both will not go to a single country.

In its monthly report, the finance ministry said Germany could benefit from Brexit as the future relationship with the UK was still unclear and London’s market access was not secured.

The location question is therefore already present for many financial services companies and Germany can offer a good alternative with Frankfurt as one of the leading financial centres in Europe, it said.

The ministry pointed to the proximity to the European Central Bank and its banking oversight. “The role of Frankfurt as the centre of banking supervision in Europe could be further strengthened and completed by a shift of the European Banking Supervisory Authority, which is still based in London,” it said.

“It is therefore self-evident that the state of Hesse and the federal government are committed to get the European Banking Authority to Frankfurt,” the finance ministry concluded.

Meanwhile in London, senior executives warned on Tuesday that Britain’s thriving car industry could be permanently damaged and its supply chains crippled if the country falls out of the European Union without an interim deal.

On course for record output by 2020, Britain’s automotive industry has been one of the country’s great success stories in recent years, employing over 800,000 people in the sector to produce for the likes of Jaguar Land Rover, Nissan and Mini.

“The greatest threat to that progress is Brexit,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders.

“To leave in 2019 without a deal would put the industry in peril, defaulting to WTO tariffs and customs barriers would damage our industry permanently,” he said.

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