'Germany needs to make UK come to its senses'

German business has a lot of vested interest in British markets, explains Josef Janning, head of the European Council on Foreign Relations (ECFR) in Berlin.

And that means Germany will have its work cut out negotiating a settlement which gives Britain access to the single market after it leaves the European Union.

“Twisting the arms of European partners” into giving Britain amicable break-up terms won’t be the difficult part.

Much harder will be convincing the British that they’ve just made a grave error.

“Germany will have to open the British Isles up to the fact that being part of the single market is in their own interest, and to put aside current ideology,” he said.

Being integrated into the single market will mean the UK will have to “swallow the fact that they will have to rubber stamp Brussels legislation” rather than gain the independence promised to them by the Leave campaign.

Germany itself won’t feel the economic effects in the short term, Janning argues, saying he foresees “no major implications” for the federal budget.

“But the markets are nervous and that will create the need to balance, which will have some costs - but these will be minor over the next few months.

Fighting contagion with action

Other than guiding the UK back to its economic senses, Berlin is going to have to have to be proactive in fending off the risk that further member states decide to call it quits.

At home, the eurosceptic Alternative for Germany (AfD) party have been surging in the polls over the last few months in the Bundesrepublik, and a recent poll showed that 63 percent of their supporters are in favour of Berlin splitting from Brussels.

Meanwhile populists in the Netherlands are also calling for their own referendum.

Next up could be a 'Dexit' vote, Janning warns - but he allays fears that it would be over a Deutsch exit.

“Even if we had a referendum, which we won’t, it would be won [by the remain side.]”

The possible Dexit referendum he is talking about is in neighbouring Denmark where the Danish People’s Party called on Friday for a popular vote on EU membership.

But the trend towards referenda on EU membership should not itself be resisted by Berlin - “that would be a gift to populists.”

“Germany needs to work instead on visible cooperation between member states to move things forward.”

Taking the initiative

The key issues for Germany are Eurozone policy and the refugee crisis, and Berlin needs to work on flexible solutions to these issues, says the ECFR expert.

“This could include creating a group of countries within the EU to agree on a common refugee policy, like what was done by a small group of countries with Schengen, when other countries weren’t yet ready for a border-less Europe.”

Or it could involve creating a common intervention team made up of aid workers deployed to refugee camps outside the continent, he argues.

But the Brexit is only likely to make Germany’s task harder, Janning warns, not least because it places yet more responsibility on Berlin’s shoulders.

“With France weakened, already Germany has to take on a bigger role, and this feeds the populists who play with anti-German sentiment and portray Germany as dominating the EU.”

Britain stepping back from the table will also increase the tension at key negotiations, he believes.

“It creates extra friction on member states. There is widespread fragmentation and it will now be extra difficult to get the Union together and keep it together."

Janning also expressed scepticism at claims made by some experts that a Brexit could make for a more trim, robust EU, freed from the handbrake applied by the reluctant Brits.

Yes, it is good that the other 27 states will not now need to implement the concessions made to British Prime Minister David Cameron in February in an attempt to avoid a Brexit scenario, says Janning.

The package included among other things a seven-year "emergency brake" on welfare payments for EU migrants and would have meant Britain would be "permanently out of ever closer union" - one of the EU's key objectives.

He also concedes that there could be some movement on important financial market regulation, with Britain being the country behind Luxembourg which dragged its feet most on creating robust rules for the financial sector.

"But other members often hid behind the British and used them as an excuse, always publicly lamenting ‘if it wasn’t for the British...’"

“Reservations on the part of other member states will now be brought to the fore.”