Germany will do “whatever we can” to ensure a successful outcome to Brexit negotiations within the two-year deadline set down in the EU treaties, the country’s finance minister has said.
Wolfgang Schauble said that a “cliff-edge” withdrawal from the EU without an agreed deal would be a disaster not only for the UK but also for Europe.
He played down suggestions – floated by Prime Minister Theresa May and Chancellor Philip Hammond – that the UK might find itself forced to adopt a Singapore-style low-tax low-regulation economic model to maintain competitiveness if it is frozen out of the European markets by the failure to reach a comprehensive free trade agreement.
And he said he expected Britain to remain a very important partner of the remaining EU and London to continue to be an important financial centre for Europe after Brexit.
Speaking alongside Mr Hammond on a discussion panel at the World Economic Forum in Davos, Switzerland, Mr Schauble said that the PM’s Brexit speech on Tuesday had provided the EU with clarity over the final outcome Britain is seeking from negotiations.
He acknowledged that the detailed talks would be “much more complicated than in the opening speeches”, but said he believed a deal was doable.
“The German government will work in these negotiations always in the direction that we minimise any risk and damage for both of us. That’s our position,” he said.
Asked whether he was worried about the possibility of a “cliff-edge”, the German finance minister said: “We are very concerned that it will not happen.
“We will not only be concerned, we will be engaged that it will not happen, because it would be a disaster for all of us.
“Now we can start to work and we will do whatever we can to avoid such a situation. I think it is possible to get it done.”
Mr Schauble said he was not shocked by the prospect of the UK setting itself up as a low-tax centre off the shores of Europe.
“I can’t really imagine that the UK – this great nation – would compare itself with Singapore,” he said.
“Therefore I am not to be shocked.
“Philip Hammond and I totally agree we have to manage this decision by the British people of Britain in the best way to minimise or to avoid any damage for the UK as well as for Europe.
“For Europe, the UK remains a very important partner.”
He added: “I am personally convinced that even after the negotiations have been done, London will remain an important financial centre for Europe.”
Mr Schauble said the whole EU must respond to the lessons of the Brexit vote, which showed the need for reform to combat disillusionment with the European project and concern about the “disruptive changes” brought about by globalisation.
“The first reaction to the Brexit decision for me was that I cried,” he said.
“The second reaction was that it is a wake-up call for Europe. We have a growing euroscepticism all over European member states.”
Mr Schauble said the referendum result had so far had a positive impact on the UK economy and said he did not expect it to exert a negative influence on the eurozone during 2017.