Germany mourns looming departure of like-minded British

For almost 70 years Hamburg’s Anglo-German Club, a 19th-century villa overlooking the Alster lake, has been a little bit of Britain in Germany’s second city.

The club is a self-described homage to Britain's "stylish understatement", with gleaming Chesterfield sofas and an impressive whiskey selection. Its old grandfather clock now ticks in time with the Brexit countdown, and club president Claus Budelmann is in mourning.

“I have tremendous respect for the British and they will be desperately missed, particularly by Germany and here in Hamburg,” says Budelmann, a retired senior partner at private bank Berenberg.

Like many sons of Hamburg, he followed a centuries-old training route to London and returned with an outward-looking view of the world – something that has kept this great port city close to Britain. Hamburg’s deep – if sometimes anachronistic – love of all things British is shared, in various degrees, all over Germany. At least it was until now.

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Asked what Germans will miss most after Brexit, Budelmann begins a long litany: liberal, outward-looking, pragmatic, flexible, innovative – things he says like-minded Germans fear will soon be minority characteristics in the EU 27.

Practical concerns

Those are the long-term fears of German chancellor Angela Merkel, too, but on Wednesday she had the more practical Brexit concerns and convened a special cabinet committee meeting, including finance minister Wolfgang Schäuble and Merkel’s chief-of-staff, Peter Altmaier.

As the EU’s largest member, looming even larger after Britain’s departure, Germany is painfully aware of the need to strike a middle ground in talks. Prime minister Theresa May is more to be pitied than censured, senior officials say, though a Berlin position paper warns “individual talks that could lead to a division of the 27 EU states”.

Germany wants everything on the table from the start and is wary of transitional arrangements because, the paper warns, kicking controversial cans down the road “will not make them any less controversial”.

Yet the ambitious – some in Berlin say hopeless – two-year window is “de facto . . . shortened . . . to 15 months”, Berlin’s strategy paper admits, when German and European elections are considered.

Schäuble’s finance ministry has warned that transitional arrangements cannot be ruled out entirely, warning of “considerable” risks of “instability” on financial markets if time runs out on striking a trade deal.

With May’s Brexit letter en route to Brussels, deputy finance minister Jens Spahn struck a conciliatory tone by playing down Brussels’s claims that Britain is facing a €60 billion parting bill.

“These are divorce talks, so we shouldn’t first put the bill on the table, instead try to maintain a good relationship,” said Spahn to Berlin’s Inforadio. “These will be the most complex talks the world has ever seen – the question how much it will cost is important but not the only one.”

Financial cost

With the political cost of Brexit still in the stars, predictions of the financial cost for Germany range from staggering to eye-watering. Britain is Germany’s third-largest export market, and Germany exports €3.2 billion more in goods and services to Britain than vice versa.

German business leaders already feel a Brexit chill, with exports to Britain down 3.5 per cent already in 2016 thanks to a slump in the second half of the year.

Eric Schweitzer, head of the Germany’s chamber of trade and industry, predicted on Wednesday that Brexit would cause “considerable damage” on trade.

To prevent worse, leading economists have urged flexibility on transitional trade arrangements. “Otherwise Germany could be a main loser of Brexit,” argues Prof Clemens Fuest of Munich’s Ifo economics institute.

Back in Hamburg’s Anglo-German Club, Claus Budelmann is philosophical about whether Germany could have done anything more to prevent Britain sailing out of the EU.

Last year’s shock Brexit result, the retired banker says, summoned up a senior colleague’s advice to him before his first spell working in what was then swinging London of 1968. “He said: ‘Claus, never forget you are going to an island,’” says Budelmann. Against Britain’s geography, psychology and establishment European scepticism, he says, Germany had no chance.

“It’s happened and we’re very sad about it,” he adds. “But the key is to be pragmatic and see what can be done now.”