Merkel holds the cards for next UK poll

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British politics has a new player. True, this newcomer does not have a vote. By all accounts, her command of English is imperfect. She is, though, a formidable politician. And hers will be an important voice in shaping the outcome of the 2015 general election and subsequent trajectory of Britain’s relationship with the EU.

Angela Merkel, I am sure, would disavow such a role. I am not so certain that the German chancellor can avoid it. David Cameron has staked the unity of his Conservative party and Britain’s future in Europe on securing a better deal in the EU. The stance taken by Ms Merkel will determine whether this amounts to a credible pitch to the voters.

In the hours after Mr Cameron’s “big speech” on Europe last month – promising a renegotiation of the terms of EU membership followed by an “in-or-out” referendum in 2017 – Whitehall held its breath waiting for Berlin’s reaction. Huge efforts had been made in advance to persuade Ms Merkel that the prime minister wanted to stay in the EU: the referendum, Mr Cameron told her, was about managing the Tory party.

Ms Merkel’s studiously non-committal response was greeted with an audible sigh of relief. The speech’s promise of a “new settlement” with the EU was a careful balancing act – designed at once to assuage Tory eurosceptics and to assure the business community that Britain is not rushing headlong for the EU exit. British officials knew that much of the reaction on the continent would be hostile. Laurent Fabius, the French foreign minister, made a rather good joke about laying out the red carpet for business leaders fleeing Britain’s self-imposed isolation. But a German Nein would have tipped Mr Cameron off his political tightrope.

The risk now, though, is that the government will misinterpret the German chancellor. Mr Cameron’s abortive attempt in 2011 to “veto” a eurozone fiscal pact was a direct result of such a misreading. More recently, British ministers have misunderstood Ms Merkel’s position on the EU budget.

When the prime minister and the chancellor ended up on the same side in blocking an increase in the budget, Downing Street hailed her stance as evidence of Anglo-German rapprochement. The reality was subtler. German officials say that Ms Merkel indeed had no wish to see Mr Cameron pushed into a corner at the November Brussels summit. The real reason she rejected the budget proposal, however, was that Herman Van Rompuy, the president of the European Council, had wanted too big an increase in Berlin’s contribution to Brussels.

In November Ms Merkel felt no pressure for an agreement. That has changed now she wants a deal in order to settle the budget issue well before this year’s German election campaign. Though the polls suggest strongly that the election will return her to the chancellery, Ms Merkel is a careful politician. If Mr Cameron is inflexible at this week’s summit on the budget, the chancellor is willing to see him isolated.

A bigger danger lies in the misreading by Britain of Ms Merkel’s position on its demands for special treatment within the EU. On one level there was much in Mr Cameron’s speech she could agree with – notably European-wide action to improve competitiveness and greater subsidiarity to safeguard sensitive national prerogatives. The chancellor also accepts that the “euro outs” should be protected as the eurozone integrates more deeply. And there are plenty in her Christian Democratic party who are fed up with “meddling” by Brussels.

The mistake would be to interpret this as assent for special privileges for Britain. When Ms Merkel talks of a reformed EU she sees any repatriation of powers as applying to all member states. Nothing can be offered to Mr Cameron that challenges the basic fabric of the union. Other nations, the chancellor says, also have interests.

So why does this matter for the 2015 election? Well, Ms Merkel is the swing player in deciding how the European debate is framed during the campaign.

Mr Cameron’s calculation is that his referendum promise is a vote-winner. If nothing else, it protects the Tories’ right flank against the UK Independence party. But, given a national mood of euroscepticism, the promise of a better deal for Britain followed by let-the-people-decide referendum should have wider electoral appeal.

On the other hand, a big fight with Europe could recast the Conservatives in the role of anti-European obsessives: a party careless of voter concerns and more concerned with internal infighting about Europe than fixing the economy and improving public services. The Tories have found themselves in this particular cul-de-sac once before. Ms Merkel now has a big say in whether they return there.

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