Merkel Ally Says U.K.’s Free-Market Stance Is Needed in EU

Absolutely Necessary For U.K. To Remain, Says CDU's Fuchs
  • U.K. exit could shift EU power center south: policy adviser
  • Comments reflect growing anxiety in Germany over Brexit

An ally of Chancellor Angela Merkel said Germany needs the U.K. in the European Union as a free-market partner, reflecting concern that a British exit would shift power toward southern European countries.

“We Germans need the U.K.,” Michael Fuchs, a deputy leader of Merkel’s Christian Democratic-led group in the lower house of parliament, said in a Bloomberg Television interview Wednesday. “There are only two countries in the whole of Europe who are oriented in a free-market situation and that’s Germany and the U.K.”

Lars Feld, a member of the Council of Economic Experts, a German government advisory panel, said an EU without Britain would increase the leverage of countries that have resisted German-led policies such as fiscal rigor.

“Southern European countries and France will have a larger influence on economic policy decisions,” Feld said in an interview. “This will certainly lead to problems in the north politically.”

A day before Britain’s referendum on EU membership, the warnings reflect rising anxiety in Germany over a Brexit. With polls showing the outcome too close to call, Merkel returned to economic arguments in urging Britons to remain in the 28-nation bloc. 

“I hope that the decision of the citizens of Great Britain on Thursday is such that we in the European Union, 500 million citizens, can stay together,” Merkel said at a conference late Tuesday. “There’s a big impact in this. The internal market is our biggest competitive opportunity.”

Fuchs raised the specter of trade barriers on German exports to the U.K., such as cars.

“Do you want to have tariffs on that?” he said. “I don’t think it’s something you’d like to have.”

Brexit Arguments

Feld, the director of the Freiburg-based Walter Eucken Institute, said a British exit would be a “terrible outcome” economically for the EU. He cited German small businesses that have cut order books by 25 percent or more this year due to Brexit fears.

“What you would observe is a large extent of uncertainty about what is going on,” Feld said. “The Leave camp is arguing that not so much will change regarding international trade, but that’s not true.”

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