Is Germany out for itself? Well, who else would it be out for?
There is a lot of guff talked about Germany, mostly in connection with the country’s apparent domination of the euro for its own ends.
No one, not least in Britain, though also in Italy and Greece, seems to ask, why would Germany wish to manage the single currency for somebody else’s ends. The Federal Republic is not a charity; it is a business. And it is in business to make a profit.
It’s called capitalism. The European Union is a market – a single market, as it happens – and Germany exploits that market. Does it in some way manipulate the market so that it gains advantage over and above its competitors? Perhaps it does, but only because it is economically stronger and better organised than its neighbours, with an exceptional manufacturing base and excellent relations between employers and unions.
German banking, by contrast, is in disarray, with Deutsche Bank, in particular, tottering from crisis to crisis. What these two truths, taken together, demonstrate is that making things is what really matters, while banking – a service designed to oil the wheels of the economy, not to be itself the economy – has, in its current bloated form, begun to outlive its usefulness.
Germany has made itself rich through manufacturing. It makes the best cars in the world and much of the best machinery and consumer goods. The only surprise – apart from the shameful neglect of its military – is that it hasn’t bothered to move into aviation in a serious way. It subscribes to the mousetrap maxim that if you make the best product, the world will beat a path to your door.
Just this week, it was revealed that China is now Germany’s leading trade partner. While Brexiteers in the UK boast that Germany cannot afford to give Britain a hard time during its upcoming talks with the EU because we are its second biggest export market for cars, Berlin has quietly got on with reorienting its trade towards China, with the US next on its list.
David Davies and Liam Fox insist that Britain can only look out and away from Europe if it frees itself from the shackles of the EU and negotiates its own independent trade deals. Germany, meanwhile, simply puts out its stall and rakes in orders for its goods. Companies based in Munich, Stuttgart, Dortmund, Düsseldorf, Hanover and Dresden – nearly all of them German-owned – don’t hide behind the fact that they are bound by trade deals made in Brussels. For a start, they helped write those deals. They simply get out and sell, knowing that the products they have developed are the best of their kind anywhere in the world.
That is is why Germany, while playing by exactly the same trade rules as Britain, outsells us five-to-one in exports to China. Soon it will be six to one.
Meanwhile, the May government in London, obsessed as it is with propping up the City of London, refuses to acknowledge that by taking Britain out of the EU it is also taking the City out of the Eurozone. But here, too, Germany is on the move. Together with France, Germany is working to relocate sizeable chunks of London’s Eurozone business to Paris and Frankfurt. This does not mean that London will cease to be a global player; rather it means that in future it will face intense competition in what used to be its own backyard.
Even if the City exerts itself, with government backing, and holds on to, say, 70 per cent of what it used to own outright, the result will be a loss for Britain and a gain for Germany. And while the battle for passporting rights rages, Germany will continue to power ahead in manufacturing – a sector that is spread right across the country and not, like banking and finance in the UK, confined to a single location.
Money isn’t everything, of course. Not quite. Angela Merkel may be ousted as Chancellor in this September’s federal elections not because of a failed stewardship of the economy, which (banking aside) is in a state of rude good health, but because of her decision 15 months ago to allow in more than a million immigrants and asylum-seekers, most of them from the Muslim World.
Even here, though, the balance of what was rash and what is prescient will shift over time. Germany needs more workers. Its birthrate has been falling for the last 50 years. In the 1960s, it bought in labour from Turkey. in the 21st century, Mrs Merkel decided, for good or ill, that she would make the best of a bad job in respect of the Muslim invasion of Europe by recruiting a new generation of gastarbeiter to man the assembly lines and keep the wheels of commerce turning. Today, amid fears of islamist incursion, that decision looks distinctly risky. In 20 years it may come to be seen as both farsighted and enlightened.
As for Germany’s domination of Europe, how could that be otherwise when the country is not only the most populous, but far and away the most productive in the the European Union? There is, I would submit, a good argument for Germany adopting a more lenient and more generous view of the ongoing fiscal crisis in Greece and the chronic imbalance between the benefits it derives from the euro and the burden being carried by Italy and Spain. But that, precisely, is why Berlin supports political as well as monetary union. If the poor South wishes to enjoy German living standards, the answer is to be more like Germany, not to expect Germany to dole out its surpluses to those who aren’t prepared to do the hard work for themselves.
Not that we need worry, for we have our Independence Day to look forward to. Next month, Mrs May will invoke Article 50 of the Lisbon Treaty and embark on a process of breaking free of the EU that will dominate politics and Whitehall for the next ten years. Germany, at the same time, will further consolidate its hold on the Chinese export market and step up its efforts in India, Africa and the USA. If the EU should carry on post-Brexit, Germany will happily go with the flow. if it should collapse, due to events in France, the Netherlands and Italy, it will still carry on. Germany doesn’t whinge. Having long ago given itself the tools, it knows how to get on with the job.