EU 'could fall apart if Britain leaves'

German weekly news magazine Der Spiegel, in its German- English special issue, encourages British citizens to vote to remain in the European Union.
German weekly news magazine Der Spiegel, in its German- English special issue, encourages British citizens to vote to remain in the European Union.PHOTO: EUROPEAN PRESSPHOTO AGENCY

German and French foreign ministers urge British voters to 'make the right decision'

BRANDENBURG AN DER HAVEL (Germany) • The foreign ministers of Germany and France have cautioned against a Brexit vote, with Berlin's top envoy warning it could eventually lead to "disintegration" of the European Union (EU).

"It would be a shock for the EU that would require mutual assurances that the EU continues to stick together and that a very successful decades-long process of integration doesn't in the end turn into disintegration," said Mr Frank-Walter Steinmeier.

Speaking on Wednesday at a press conference with his French counterpart Jean-Marc Ayrault ahead of the June 23 referendum, the German minister added: "We can both say that we want the majority in Britain to make the right decision, and the right decision from our point of view can only be to remain in Europe. Europe would be lacking a lot if Great Britain decided to leave."

The "Remain" camp, led by conservative British Prime Minister David Cameron, has been set back by a series of polls putting Brexit supporters in the lead in recent days.

"The British are facing a choice," said the head of French diplomacy during a joint visit with Mr Steinmeier to Brandenburg near Berlin. A vote that would leave Britain as an outsider to the EU is "a reality which we don't want".

Britain's partners are stepping up warnings that if it votes to leave, banks and financial firms based in London could lose their money- spinning EU "passports".

The City of London vies with New York to be the world's biggest financial centre in part thanks to the automatic right to sell services across the 28-nation bloc with low costs and a single set of rules under a system known as passporting, industry and European officials said.

Asked what would happen in case of a Brexit, French Finance Minister Michel Sapin told Reuters: "There will be no passport, or that would have to be negotiated against a lot of reciprocal concessions."

He was saying aloud what many EU officials and diplomats are saying privately. Unfettered access for financial services is widely seen as the "crown jewels" of British membership benefits, and London's partners would charge a high price for keeping it, if they were willing to do so at all.

Five of the last six published polls have shown Brexit supporters ahead, a prospect that has unnerved investors. Global equities have lost more than US$2 trillion (S$2.7 trillion) over the past week.

Asian and European markets sank yesterday after Federal Reserve boss Janet Yellen sounded a warning over a possible exit from the EU. The Fed on Wednesday lowered its growth forecasts for this year and the following two, and flagged interest rates rises to be lower and slower, highlighting concern about the US and global economic outlook.

"Clearly, this is a very important decision for the United Kingdom and for Europe," she told reporters. "It is a decision that could have consequences for economic and financial conditions in global financial markets. If it does so, it could have consequences in turn for the US economic outlook."

Exit campaigners have poured scorn on the British government's bleak vision of a post-Brexit Britain. Justice Secretary Michael Gove criticised the austerity budget that the "Remain" camp says would be necessary to shore up public finances if the UK votes to leave.

Mr Cameron - who called the referendum - dismissed criticism that the pro-EU argument has been too negative and has failed to address immigration. He told Channel 4 News in an interview: "Immigration is a challenge but I think everybody understands you don't solve an immigration problem by wrecking your economy."

AGENCE FRANCE- PRESSE, REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 17, 2016, with the headline 'EU 'could fall apart if Britain leaves''. Print Edition | Subscribe