Merkel Ally Warns of Concern at U.K. as Hague Threatens Veto

Germany is growing increasingly concerned at the rise of euro skepticism in the U.K., a leading party ally of Chancellor Angela Merkel said.

Germany is growing increasingly concerned at the rise of euro-skepticism in the U.K., a leading party ally of Chancellor Angela Merkel said.

David McAllister, the West Berlin-born prime minister of Lower Saxony state who holds German and British passports, made his comments less than 24 hours before U.K. Foreign Secretary William Hague said disaffection in Britain with the European Union is at its highest level. Hague used a trip to Germany yesterday to warn that the U.K. government is ready to veto the EU budget next month.

“We in Germany are worried that euro-skeptical positions are increasing in the U.K.,” McAllister, 41, a member of the executive board of Merkel’s party, said Oct. 22 in a Bloomberg Television interview. “What’s very important for us in Germany is Britain is part of Europe and we need Britain in the European Union,” he said. “That’s why we’ve got to sort things out.”

Germany and the U.K. denied a rift this week over attempts to fix the EU’s seven-year budget, as both governments moved to play down tensions over their increasingly divergent positions on Europe. Hague underlined those differences during his visit to Berlin, saying that while Germany is preoccupied with the euro, Britain “will never join” the single European currency.

Calling for “some mutual respect,” Hague said that the U.K. has “a lot of sympathy with the burdens Germany faces” in combating the crisis in the 17-nation euro area.

No Blame

“We must not blame them for having the problems of the euro,” he told a small group of reporters in the U.K. Embassy in Berlin. “And they must not blame us for making the correct decision not to be in the euro.”

For Britons, the focus of opprobrium is Brussels, as the U.K. experiences “the deepest disillusionment” ever with the EU, said Hague. With an EU summit next month due to try to forge agreement on the 27-nation bloc’s 2014-2020 budget, the U.K. government is insisting on a total freeze on spending at best or no deal at all.

“I don’t want to quantify any readiness to use the veto,” said Hague. “But yes, we are prepared to use it if necessary.”

Prime Minister David Cameron has pledged to renegotiate Britain’s relationship with the EU in a range of policy areas. In October last year, 81 members of his Conservative Party backed a motion calling for a referendum on Britain’s continued membership of the bloc. Home Secretary Theresa May said Oct. 15 that Britain wants to opt out of more than 130 EU policing and justice powers.

‘More Europe’

Germany has at the same time pressed ahead with proposals to give more powers to the EU to intervene in national budgets as a means of tackling the debt crisis in the euro area.

“The German answer to the crisis is that we need more Europe and not less Europe,” said McAllister, citing moves toward more common policy on the labor market, financial markets and the economy.

“That’s why Germany is in favour of working more closely together, especially with respect to the 17 states with the euro,” he said. All the same, “even though Britain is not willing to introduce the euro, which we fully respect, we still need Britain in the EU.”

McAllister, who is preparing to fight elections for Lower Saxony’s regional parliament in Hanover on Jan. 20, said that the euro crisis and its impact on the economy, as well as “the future of Europe,” is playing with voters.

Trust the Chancellor

Polls of state voting intentions mirror national surveys in suggesting that McAllister and Merkel’s Christian Democratic Union might win the election yet struggle to repeat its coalition with the Free Democratic Party, which has plunged below the 5 percent threshold needed to win seats both regionally and Germany-wide.

With the opposition Social Democrats and their Green Party allies polling a combined 48 percent support, enough to form a government, McAllister is expecting Merkel to make as many as seven campaign appearances in Lower Saxony in January.

“Things have changed in Germany since the last regional elections,” said McAllister, referring to a run of state defeats in 2011 when Merkel’s party lost ground as the euro crisis raged. “Angela Merkel is highly respected,” he said. “Germans know how strong the chancellor is. Germans trust the chancellor.”

To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net; David Tweed in Berlin via dtweed@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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