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Germans favor a self-destructive policy

Germans favor a self-destructive policy
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From today’s Open Europe news summary:

Majority of Germans want Merkel to take tough stance in Brexit negotiations

A poll for the Körber Foundation reveals that 58% of Germans think Chancellor Angela Merkel should ‘negotiate tough’ with the UK while 40% say she should be ‘ready to compromise’. Within Merkel’s CDU party 65% are in favour of a hardline approach whereas supporters among the leftwing parties and the AfD are more inclined towards a compromise deal. The poll also shows that 67% of Germans think that the UK’s decision to leave the EU has reduced the cohesion among the remaining members of the bloc. Meanwhile, 62% believe that the EU is not on the right track and 42% want a referendum about Germany’s EU membership.

Although this short clip never defines what constitutes a “tough stance”, I assume it means that goods and services from the UK should face restrictions–tariffs, quotas, or even outright prohibitions–regarding accessing the EU market. OK. Does that also mean that EU businesses should be restricted from exporting to the UK? I doubt that the Germans want to reduce sales, but the only way UK customers can buy EU goods is with euros obtained from exports to the EU. Of course, the Europeans could continue to sell to the UK and stockpile their British Pounds, but that is equivalent to buying something with a check that the payee never cashes. In other words, the EU would be making a gift to the UK. Let us not forget that the purpose of exporting is to import.

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Patrick Barron is a consultant to the banking industry. He teaches Austrian school economics at the University of Iowa and Bank Managemant Simulation for the Graduate School of Banking, University of Wisconsin. Visit his blog. Send him mail.

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