"Germany and surrounding countries have large drop out rates and many students take a long time to complete their degrees."
The second part of that belief is pretty outdated now the Bologna process has been implemented. The days of the 'eternal student' are long gone. Most undergrad programmes have gone over to bachelors followed by masters instead of going straight to a masters or diploma. The bachelor usually needs to be completed in four years. It is possible to repeat years, but not indefinitely. Even before the bachelors/masters distinction had been introduced, most universities had introduced a 14 semester maximum, after which you just got kicked out for overstaying your welcome.
Most German academics think the bachelors IS of a lower standard than the old masters programme, and many students carry straight on to do a masters for that reason. But it doesn't automatically mean that the British bachelors is of a higher standard than the equivalent in Germany, just that employers in the UK are OK with accepting a lower standard, while German employers are traditionally used to seeing a master's as the standard qualification.
However it is true that certain universities deliberately take on larger numbers of students than they can cope with because they know so many will fail the first year. I believe that's particularly extreme for maths programmes. The academics, of course, it's because standards have fallen in schools, not that their own expectations have increased.
"The European context is very different. Students live at home (how does that make them less independent that UK students?)."
Eh? In Italy maybe, but certainly not in Germany (unless you live and study in Munich, which is horrifically expensive). It's absolutely standard to move away from home when you start studying, but perhaps less common to move into university accommodation than in the UK.
"Standards are also very inconsistent in many European countries, as there are no systems of external examining, moderating exams and quality curriculum assessment is very loose."
That used to be the case in Germany, which used to follow the Humboldt ideal of 'total freedom of education for teacher and student', but with the advent of the Bologna era I believe all programmes are now subject to external accreditation which has to be renewed (every 5 years?). The accreditation checks that the standards and syllabus are rigorous enough, and if not can refuse to allow a bachelor's or masters to be awarded under that name. The accreditation thing is a BIG thing for unis nowadays, DH has been through a few of them. I'm not sure how much this kind of external accreditation has been implemented across Europe though.