How Germany helped shape the conditions for Brexit
More recently, Germany has continued to put its own economic interests before others, pursuing an illegal trade surplus with the rest of the eurozone. It would be possible for Germany to stimulate eurozone growth through tax cuts and domestic infrastructure spending but there seems little prospect of this happening. Furthermore, it is primarily German opposition to fiscal transfers within eurozone countries which is arguably preventing the proper operation of the single currency. Instead, its policies are sucking demand out of the continent, resulting in perpetual slow growth. Strangely, however, there has not been the same degree of condemnation from the European Commission as there was towards Italy for breaching its obligations on its deficit.
Following the 2008 crisis, Greece was thrown to the wolves by Germany and France. This economic waterboarding of a fellow EU member state for domestic political reasons was a terrible reminder of where power really lies in this supposed union of equals. It is estimated that 95 per cent of the money “lent” to Greece ended up back in the hands of private creditors, mainly European banks. This was not so much a Greek bail-out as a German bail-out.
It was German car companies who lobbied hard for EU legislation supporting diesel engines in cars, arguably to protect their markets against superior Japanese petrol engines. It was those same companies that deliberately broke the law on CO2 emissions testing, giving themselves a competitive advantage and the whole of Europe worse air quality. Similarly, it was German manufacturers of domestic appliances who successfully lobbied the EU to protect themselves from competition, notably from Dyson (this was recently overturned in the ECJ).
It is also Germany (among others) that is preventing the completion of the single market in services by restricting access to certain professions through domestic regulation. They have also been accused of breaching rules on the free movement of capital by, among other means, holding “golden shares” in Volkswagen. When the EU talks of the four freedoms (of people, capital, goods and services) being sacrosanct, it is worth noting that Germany chooses not to play by the rules when it suits, to the particular disadvantage of the UK with its strengths in services and capital.