I was not expecting Germany to suddenly welcome the UK idea that we might have a new relationship based on trade, freed of many of the burdens of the EU. That will take time to shift France and Germany, as our referendum approaches and as it becomes clearer UK people will vote for exit if we do not get a very different approach from today’s.I will continue to press for an acceleration of the timetable. In particular a Mandate referendum soon could be a game changer, if the rest of the EU was suddenly confronted by a very large vote in the UK for a new relationship based on trade.
What I do expect is more Anglo-German agreement and co-operation. Germany is suddenly more lonely. Hollande is seeking to make France the leader of the subsidy seeking south, rallying countries to the cause of opposing German led austerity. Meanwhile at home Frau Merkel for the first time faces a serious political challenge from Eurosceptics. The new Alternative for Germany party wants a break up of the current Euro. They will campaign long and hard against more German money being used to bail out overspending countries and bankrupt banks around the zone.
Whilst I do not presume to tell people how to vote in other countries, I wish Professor Henkel well. The founder of the new party, he lobbied me to get the Uk to join the Euro in the 1990s. More recently he has written a book explaining why he was wrong. He kindly came to the Uk to apologise in person to a few of us who had resisted his case. He is an able, well briefed expert on currency matters, who has changed his view in the light of experience.
Meanwhile, Germany has just had to agree to an extension of the debt union which lies behind the Euro. Ireland and Portugal have been given longer to repay, which means a further softening of the terms of their loans. Cyprus is seeking more assistance. The Euro can only carry on all the time Germany and a few other richer countries are prepared to lend or grant others more of their money. As some countries cannot afford the loans, more of it will end up as grant.