European economic integration has always been inspired by the model of the German economy - and for good reason. Germany’s economic record was excellent for much of the post-war period, and in the 1979 European Monetary System the Deutschmark was the currency against which all others were measured. German ideas were also behind the Maastricht Treaty convergence criteria and the Growth and Stability Pact - to the extent that the European Central Bank was nicknamed the “Bundesbank of Europe”.
Yet now the German motor has stalled. German economic growth will scrape 0.5% this year, after a dismal 0.2% the year before. If Germany is no longer the inspiration for European economic integration, either through sheer material wealth or via the ideas that the wealth helps to propagate, then how will European economic integration develop in the future? To discuss how the German economic crisis has reverberated upon British politics, Café Babel spoke with Liberal Democrat MEP Chris Davies.
Café Babel: Do you think that Germany’s recession will change the average British person's perception of the European Union? In particular, do you think it is putting people off the idea of ever joining the single currency?
Chris Davies: In my view the German recession has very little to do with either the euro or with the European Union. However, the heavy anti-European bias in the UK media means we can expect Eurosceptics to try and link everything bad to Brussels, from the German recession to England losing at football. When taking all the arguments into account, I think most people will accept that the German recession has nothing to do with the EU, and in any referendum I think the British people will vote on the merits the euro has to offer for the UK.
CB: Is this the end for German prosperity?
Davies: Germany's economy has grown 29% since reunification – about the same as Britain’s. Given the obvious difficulties in swallowing up 18 million people from the old eastern bloc I think Germany's problems are far from long term - and given that I see either BMWs, Mercedes or Volkswagens on every road here in England it doesn’t look like the German economy is in any permanent danger.
CB: In light of the German downswing, do you think that Britain has the potential to take over as the European powerhouse if we ever adopted the Euro?
Davies: There is no reason why not, but either way one thing is for sure - Britain will not be a powerhouse, either economically or politically, if it remains outside of the euro.
CB: Do you think that Britain's role in the European Union has up until now been a product of the people's will or the government's? Do you think that Germany's economic trouble will change this?
Davies: Since the people expressed their will in the referendum of 1973, Britain’s role in the EU has always been determined by the British Prime Minster. Germany is the EU's most populous country and has a reputation for financial efficiency. The fact that Germany’s economic problems should occur now is beneficial to the Eurosceptic cause but ultimately they are only short term. Germany's economy will recover – indeed, the undervalued euro is already boosting Germany’s exports.