Hammond urges Germany not to punish UK over Brexit

Chancellor Philip Hammond has urged German politicians not to damage growth in Europe by punishing Britain over Brexit, telling Germany’s political and business elite “a lot is at stake”.

Mr Hammond told a conference in Berlin that Britain and Germany were the growth dynamos of Europe thanks to the “policies and philosophies that guide the economic management of our two countries”.

But he hinted at fears in London that Germany and other EU countries might make life awkward for Britain to deter other countries from heading for the exit and that politics might trump economics in the forthcoming Brexit negotiations.

“I understand Germany will approach the challenge with the priority of protecting the integrity and unity of the EU,” he said. “But this does not have to be a negative sum game. A lot is at stake.”

Angela Merkel, German chancellor, warned this week that Britain would face “limits” on access to the single market if it insisted on curbing EU immigration.

Last October French president François Hollande said of the Brexit talks: “There must be a threat, there must be a risk, there must be a price, otherwise we will be in negotiations that will not end well and will inevitably have economic and human consequences.”

Mr Hammond was speaking at the annual Die Welt economic summit, where he addressed business leaders and politicians behind closed doors to try to build a common understanding before Brexit talks start.

“The UK government is clear that a strong and successful EU and a strong and stable euro are very much in the UK’s interests and are a key objective for us in the forthcoming negotiations,” he said. “We will not do anything that would undermine the EU or risk its unravelling.”

He added: “The referendum decision is irreversible. People like me who believed that it was better to remain inside the EU and to campaign for reform within, have moved on. The debate is now about what kind of Brexit.”

Mr Hammond, who also held talks with his German counterpart Wolfgang Schäuble on Tuesday night, argued it was in Germany’s interest to keep open trade links and access to Europe’s biggest capital market in London.

While acknowledging Germany’s political leadership role in the EU, he also claimed that the two countries had a common task after Brexit to generate growth and promote open trade.

“Britain and Germany together have been responsible for more than half the economic growth in the EU since 2010 and three quarters of the employment growth,” he said.

“We need to harness that energy for the good of the future of the EU and the UK. We need to find a solution which recognises the constraints on both sides, but delivers an outcome that supports continued economic growth.”