U.K. Prime Minister David Cameron and German Chancellor Angela Markel ,are both talking up competitiveness — in two incompatible languages.
Cameron’s determination to protect the financial-services powerhouse in London and tame what he sees as the bureaucratic leviathan known as the European Union risks turning his country into an island of hedge funds, in the German view.
“It’s dangerous for them to think the City can stay top of the pops outside the union,” said Otto Fricke, budget-policy spokesman for the German Free Democrats, the junior party in Merkel’s coalition.
The British-German disconnect will shape two parallel processes: whether the U.K. remains in the 27-nation EU, and whether the 17-nation euro area evolves past the debt crisis into an economy productive enough to afford its social-safety nets.
Britain generated 23 percent of the EU’s financial-services output in 2011, with 13 percent of the population, according to EU data. Finance made up 9.6 percent of British gross domestic product, compared to an EU average of 5.7 percent.
It was 4.4 percent in Germany, the world’s second-biggest exporter and home of manufacturers such as Siemens AG (SIE) and Volkswagen AG.(VOW)“The British view is that the City is the largest financial center in Europe by a mile, so there is that attitude that we know how to do it and we’ll tell you,” said Graham Bioshop, who has advised European officials on financial regulations for two decades and is author of the book,’The EU Fiscal Crisis.’ ‘It doesn’t go down too well’.