Brexit will have ‘consequences’ for the UK says Olaf Scholz
Germany’s main political parties are preparing to form a new coalition government after the Social Democratic Party of Germany’s (SPD) Olaf Scholz won the ballot last week. Much has been said of the incumbent Vice Chancellor, who is viewed as experienced and a safe pair of hands. Many now believe that Germany could move away from the conservative mould that Angela Merkel has formed around the country in the last 16 years and instead take on a more socialist outlook.
The Green Party — whose policies mirror many of the SPD’s — are in the enviable position of having secured 15 percent of the vote, making them vital in forming a new coalition government.
However, with two left-leaning parties likely to enter cahoots, many have warned that business in Germany may up sticks to avoid higher taxes.
Dr Alim Baluch, a professor who specialises in German politics at the University, said he could see companies based in Germany moving to the UK, which has looked to attract foreign business and investment with its promises of freeports and gigafactories since leaving the EU.
In the run-up to the German elections, Mr Scholz championed tax hikes and plans to reintroduce a wealth tax, while The Greens pushed for a digital tax on Big Tech’s operations in Germany.
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Olaf Scholz: The SPD man (centre) clinched the vote over the CDU
If Mr Scholz introduced these things, some of the UK’s newly established freeports and free zones could be a lure to German businesses that want to circumvent foreign export taxes.
As Dr Baluch told Express.co.uk: “We have seen businesses doing out of Germany or through Germany in recent years.
“Germany has always given businesses something in return for comparably higher tax rates: good infrastructure and transport systems.
“Yet, nonetheless, I can see that this is something being questioned, and we have seen lots of employers threatening to leave Germany time and again.
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“I could see these companies moving to the UK — but it depends on where they wanted to sell.
“If the EU was their primary market, then no.
“But if their primary market is Asia or the US or other parts of the world — if the EU was not as important — then I can see them moving to the UK, absolutely.
“There are lower taxes, there is great infrastructure, 5G is rolled out across most of the country.”
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However, Dr Baluch conceded: “But I don’t necessarily see a panic over a Scholz and Anna Baerbock (leader of The Greens) take over because they are quite flexible and SPD has very strong ties with the German car industry.
“They would freak out if Di Linke (The Left) ended up in government, however.”
Currently, Mr Scholz appears likely to partner with The Greens and the pro-business Free Democratic Party (FDP), who won 12 percent of the vote.
Earlier this week, Naz Masraff, director of Europe at Eurasia Group, put the likelihood of this alliance happening at 75 percent.
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Taxation is not the only thing that could find itself in Mr Scholz’s firing line.
The SPD man laid into the UK last week after claiming Britain’s decision to end freedom of movement with the EU as the reason for the ongoing fuel crisis.
While he said he hoped Boris Johnson would be able to deal with the consequences of Brexit, he maintained that the UK had been warned of such outcomes.
He said: “The free movement of labour is part of the European Union, and we worked very hard to convince the British not to leave the union.
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“Now they decided differently, and I hope that they will manage the problems coming from that, because I think it is constantly an important idea for all of us to make it happen that there will be good relations between the EU and the UK, but this is a problem to be solved.”
Meanwhile, Mr Scholz is understood to have progressed talks with The Greens to enter an agreement with the FDP.
However, Mrs Merkel is thought to have kept the door open for the SPD to negotiate a partnership with her ruling Christian Democratic Union (CDU)—Christian Social Union (CSU) coalition that has dominated German politics for nearly two decades.