If she truly brought it up completely out of the blue, just in the general context of what Germany might be like to visit today, or what it might have been like for your British son if he'd been able to spend time there, then .... in your place, I would have asked her what she meant. Why did she suddenly think about the Holocaust? What did she want you to know about what it was like to live in Germany in the postwar years, to be German in Europe and the world? What did she hope for or expect from you in response?
I'm not Jewish, and not of Jewish heritage, but my grandparents were Holocaust survivors. They were "Aryan" Poles who were arrested for resistance activities during the Nazi occupation of Poland and were sent to a concentration camp. They survived.
I was in Berlin in the summer of 2012, when Germany made the quarterfinals in the EUFA football competition brilliantly co-hosted by Poland and Ukraine. Germany lost, but before that - Berliners were rocking the German flag like crazy, and German flag themed stuff really took off - I remember these black-red-yellow MnMs in every vending machine in Berlin! Germans I knew (and even a few I'd just met) seemed a little incredulous; some remarked that they saw and felt something different that summer. There was a new ease with the German flag, a kind of social permission to display it and to celebrate Germany. This was maybe the first time since 1945 that German people widely felt that they could fly Germany's (postwar) flag and have it mostly be about football. Or SEE Germany's flag and be proud and happy, at least for the moment, in the context of football.
No person, no community, no demographic, and no nation can absolve Germany for its crimes under the Nazi regime. They should not and cannot be forgotten. The work that Germany does, remembering and acknowledging the Holocaust - and I remember hearing Angela Merkel make a speech all about this, very explicitly, in the summer of 2012 and it was unremarkable by then - of COURSE she'd say that - is vital, but not only for Germany. What Germans did from 1933-1945, humans did. And as Germany comes to grips with it publicly, all humans can also learn.
There are a couple of shockingly antisemitic posts on this thread. People think that that's somehow OK now. It isn't. My initial impulse is to report these posts, but I also think it's useful to let them stand and be observed.