A bad time for Britain to say auf Wiedersehen As communism crumbled across Europe during the winter of 1989, Foreign Office diplomats offered urgent advice to Margaret Thatcher. A reunited Germany would emerge as the continent's most powerful player. Britain's priority should be "better and closer relations with Germany." History records that the then prime minister scoffed at such self-interested realism. Waving a map delineating past German expansionism, she embarked on a doomed effort to thwart unification. François Mitterrand was enlisted but the French president soon changed sides in the face of Helmut Kohl's resolve. Britain found itself marginalised in Washington, where George H.W. Bush backed Mr Kohl, and unwelcome in Bonn. Relations between Britain and Germany are not as bad now as they were then. This is not to say they are good. The relationship between Angela Merkel and David Cameron has turned from lukewarm to distinctly cool. Asked when the two leaders will next meet, one German official remarks: "What's the point?" The eurozone crisis has bred a more assertive Germany - witness its willingness this week to scupper the proposed takeover of BAE Systems by EADS. But the real argument with Britain is about Europe. The rot set in last December when Mr Cameron tried to veto deeper economic and political eurozone integration. His pitch for special privileges and protections for the City of London was viewed in Berlin as an attempt to unpick the essential fabric of the single market - the EU's cherished "acquis." Mr Cameron's indulgence of hardline Tory eurosceptics has cast him as an unreliable partner. What's the point of Ms Merkel striking deals in Downing Street if they are cast aside when he feels a need to play to the eurosceptic gallery? Germany recently signed up to a British initiative to freeze the EU budget. Now it finds Mr Cameron waving a unilateral veto. British ministers are also questioning some of the union's fundamental pillars, including free movement of people. It is one thing to stand aside from European integration. Another constantly to congratulate oneself for staying out of a "doomed" eurozone. Britain's economy, mired in recession and with a deficit to rival that of Greece, is hardly a role model. And when Mr Cameron trumpets the importance of the City, Germans are inclined to recall that all the trouble started with the anything-goes financial capitalism it had made a trademark. What does it matter if the Germans are cross? British disengagement from "core" Europe is inevitable. The government has already said it will not join a new banking union. Mr Cameron is now suggesting a two-tier EU budget so that Westminster can pay less. Were Britain planning to leave the union - and on its present trajectory it is heading in that direction - such complacency might just make sense. But Mr Cameron insists that EU membership remains vital to the nation's prosperity. Any serious business leader would agree. So the terms of a new settlement will be critical. Will Britain simply have to accept the rules laid down by eurozone states. Or will it have a chance to help shape policy within the EU of 27? The signs are not encouraging. Prospective members of the proposed banking union are planning to vote as a bloc. So Britain needs allies. Given his bad start with François Hollande, Mr Cameron is not spoiled for choice. Anyway, Germany is the important player. On the big economic issues - the single market, competitiveness and budget discipline - it holds positions quite close to those of Britain. Germany has an interest in sustaining a good relationship. It would help Ms Merkel avoid suffocation by the French. But the chancellor has her own red lines. Mr Cameron cannot expect to win friends by seeking to undermine the keystones of integration. Challenging free movement is simply not smart. Britain, albeit mostly by choice, is sliding fast into Europe's second division. Whether a new relationship can be made to work will depend on how many friends it has. The answer at the moment is precious few. The breakdown of the EADS-BAE deal was another reminder, if one were needed, that Britain cannot escape the consequences of decisions taken on the continent. Mr Cameron has chosen the wrong moment to bid auf Wiedersehen to a natural ally.