30. August 2016

Business Spotlight: Can Germany
 rescue the EU?

Brexit will make the “German question” even more acute. If the United Kingdom goes ahead and leaves the European Union, the future of Europe will depend even more on Germany’s role than was already the case.

EU states

On paper, Germany will clearly be more powerful as its relative political and economic weight increases. But it will still lack there sources to be a European he gem on. After all, Germany makes up only 28 per cent of the euro zone’s total GDP. Between them, France (21 per cent) and Italy (16 per cent) makeup a bigger share. This illustrates that Germany is not a he gem on at all — with or without the UK — but rather a “semi-he gem on”.

Germany maybe bigger and more powerful than any other member states, but it is too small and weak to impose its will on the continent or solve Europe’s problems in other ways. In that sense, Germany has returned to the position it occupied in Europe between 1871 and 1945 — except in geo economic rather than geo political form.

At the same time, however, the with-
drawl of the UK will increase the perception of German dominance in Europe. Fear of German power was one of there a sons why many people elsewhere in Europe, including in traditionally pro-German countries, wanted the UK to remain in the EU.

With this sharpened sense of German dominance, the pressure will increase on other EU member states to form coalitions in different policy areas in order to achieve a counter balance to Germany. This is the same dynamic that we have already seen in the euro zone in the past six years and between Schengen countries in the past year.

Germany could therefore, paradoxically, become weaker — that is, less able to get what it wants — and the EU could become less rather than more stable than it was before Brexit.

Hasan Kundnani