23 February 2016

Cameron: Government would promptly trigger Article 50 in the event of a Leave vote

Prime Minister David Cameron yesterday set out the details of the UK-EU deal in the House of Commons. He argued that the referendum would be “a straight democratic decision… Having a second renegotiation followed by a second referendum is not on the ballot paper.” He went on to say that “If the British people vote to leave, there is only one way to bring that about, namely to trigger article 50 of the treaties and begin the process of exit, and the British people would rightly expect that to start straight away.” Cameron also said that in recommending a vote to remain inside a reformed EU he had “no other agenda than what is best for our country,” widely interpreted as a dig at London Mayor Boris Johnson. Labour leader Jeremy Corbyn described the renegotiation as “a theatrical sideshow” but also claimed that “there have been some worthwhile changes” such as the red card for national parliaments and the safeguards for non-euro member states.

The Government yesterday also published a white paper on the UK’s renegotiation package entitled “The best of both worlds: the United Kingdom’s special status in a reformed European Union” which warns that Brexit could have negative consequences ranging from higher prices for consumers through to increased risk of crime and terrorism and reduced influence on the global stage. On the issue of EU migrants’ access to benefits, the document notes that in 2013-14, £2.5bn went on in-work benefits for EEA migrants, 10% of total spending, even though EEA workers only account for 6% of the total workforce.

Meanwhile, dozens of Conservative MPs have continued to come out against continued membership leading to estimates that ultimately, the party could be split roughly down the middle. The Financial Times reports that former Defence Secretary Liam Fox, a prominent supporter of the UK’s exit from the EU hinted he might stand for the leadership of the party in future, saying “Never say never again.”

Source: Open Europe Blog: Article 50 and the mechanics of leaving the EU Hansard UK Government White Paper on EU Renegotiation The Financial Times The Times The Times: Leader The Daily Mail The Daily Telegraph

Business leaders warn Brexit would risk investment and jobs

In a letter to The Times, about 200 business leaders employing more than 1.2 million people warn that “We believe that leaving the EU would deter investment and threaten jobs. It would put the economy at risk.” The signatories include chairmen or chief executives of 36 companies from the FTSE 100, including Asda, BT, Marks & Spencer, Kingfisher and Vodafone. The chief executives of Heathrow and Gatwick have also signed. Sky News reported, however, that at least half of dozen of the 20 members of the Prime Minister’s Business Advisory Group, including Alison Brittain, chief executive of Whitbread and Steve Varley, the UK chairman of EY, opted not to sign the letter.

Writing in City AM, entrepreneur and fund manager Jim Mellon argues that “we should leave the EU because the project itself is failing” and that, “France and Italy are going to sink the euro Titanic.” Meanwhile, increased concerns around Brexit yesterday saw the pound fall to its lowest level against the dollar for almost seven years. Citigroup have increased their probability of Brexit from between 20% and 30%, to between 30% and 40%. An ICM poll, conducted online, found that 42% of respondents bank remaining in the EU with 40% backing leaving and 17% saying they don’t know how they will vote.

Source: The Times City AM: Mellon The Financial Times The Guardian ICM

Boris Johnson comes under fire from London Assembly for decision to back Brexit

London Mayor Boris Johnson came under fire from London Assembly members during Mayor’s Question Time yesterday morning with Len Duvall, Labour’s leader in the London Assembly, accused him of “sacrificing London’s future economic security on the basis of [his] personal ambition.” However, Johnson hit back at suggestions the City of London would be “jeopardised” by Brexit, arguing that “The City of London is overwhelmingly the preponderant financial centre here in this part of the world, indeed it’s the biggest on earth. I really think it is illusory to think London would somehow wither away and die.” A leader in Süddeutsche Zeitung written by the paper’s London correspondent Christian Zaschke argues that “[Boris] Johnson risks the unity of the Tories, Great Britain’s future in the EU and thereby possibly the future of the EU itself to satisfy his own ambition.”

Source: City AM

French Foreign Minister: “Everyone has to accept a differentiated Europe”

Jean-Marc Ayrault, the newly-appointed French Foreign Minister, told Journal du Dimanche in an interview, “Everyone has to accept a differentiated Europe, within which those who want more Europe will be able to move forward and those who do not wish to go further will not be standing in the way.” He added, “David Cameron had asked Europe to help him win the referendum to keep the UK in the EU. This is what we did in Brussels, while also making a decision in the interest of all other Europeans. There will be no Treaty change, no UK veto over the reinforcement of the Eurozone, no putting into question the principle of free movement.”

Separately, speaking to Rome-based foreign journalists yesterday, Italian Prime Minister Matteo Renzi said, “We have reached an agreement [with the UK] which I believe is an excellent compromise for everyone, but the [British] citizen that votes in the referendum is voting for an idea – whether Europe is still attractive or not.” He added, “I hope Britain remains inside the EU, but if it leaves, the consequences will be worse for British citizens than for European ones.”

Source: Journal du Dimanche Reuters Italia

Italy proposes common bonds to fund EU response to migrant crisis

In a new position paper published yesterday, the Italian government suggests that “the new policy of a shared management of the EU external frontiers requires different funding sources and would justify the recourse to a mutualised funding mechanism which could entail the issuance of common bonds.” The document also lists a number of proposals for further Eurozone integration, including: a separate Eurozone budget; a Finance Minister for the euro area; turning the Eurozone’s rescue fund (ESM) into a European Monetary Fund; and a common unemployment benefit. The paper also urges to deepen the single market at 28, noting that “cooperation between euro area and non-euro area countries will be key. Further integration in the Eurozone and further integration in the EU are, and should be seen, as mutually supporting and beneficial. Convergence within the euro area should not come at the expense of divergence with non-euro member states.”

Source: Governo Italiano

Child-benefit curbs in UK-EU deal could save Berlin €200m a year

Süddeutsche Zeitung reports that the indexing of child benefit negotiated as part of the UK’s EU reform deal could save Berlin millions each year. Data from the Agency for Employment shows that over €200m was paid out in child benefit to EU migrants’ children living outside of Germany in 2015 – over half the money went to Poland, followed by Romania and the Czech Republic.

Source: Süddeutsche Zeitung

Poll: Dutch voters want their own EU referendum and result would be tight

The Times reports that, according to Maurice De Hond poll published yesterday, 53% of Dutch people support a referendum on their EU membership. Pollsters also found that if there were a vote, 44% would back staying in the EU and 43% would vote to leave.

Source: The Times

New study: scrapping Schengen could cost Europe trillions of euros

A new study by Prognos AG for the Bertelsmann Stiftung has found that scrapping the border-free Schengen area would have significant economic consequences. The analysis predicts that, in an optimistic scenario where the price for imported goods from other European countries rises by 1%, EU GDP will shrink by €470bn over ten years. In a pessimist scenario, assuming import prices rise by 3%, it would amount to a loss €1.4tr to EU GDP over a decade – costing Germany and France alone €235bn and €244 respectively.

Source: Die Welt

Greece fears becoming migrant bottleneck as Macedonia imposes border restrcitions

Thousands of refugees and migrants are stuck in Greece after Macedonia tightened border restrictions. Police in Macedonia stopped letting in Afghan nationals over the weekend, while also tightening controls on Syrians and Iraqis, according to Macedonian and Greek officials. Greece’s migration minister Yiannis Mouzalas said Greece is lobbying Macedonia to lift the restrictions. Meanwhile, people-smuggling gangs collected as much as £4.6bn last year as more than a million migrants made their way into Europe, according to a report by Europol, The Times reports. Separately, The Daily Telegraph reports that the European Commission has watered down proposals on tighter passport checks and security controls people entering the Schengen zone that were drawn up in the wake of the Paris attacks.

Source: The Daily Telegraph The Times Kathimerini The Times 2

Spain: Ciudadanos leader suggests next 48 hours will be crucial to seal government pact with Socialists

Albert Rivera, the leader of Spanish upstart centrist party Ciudadanos, told Onda Cero this morning, “Either we reach an agreement within the next 48 hours or there will be no deal” with the Socialist Party over the formation of the next Spanish government. However, Podemos leader Pablo Iglesias reiterated this morning that a government including both his party and Ciudadanos “is not possible”. Socialist leader Pedro Sánchez is due to face the investiture debate and a vote of confidence in the lower house of the Spanish parliament next week.

Source: Antena 3 El Mundo

ECB hints at tiered negative deposit rate to reduce pressure on banks

ECB Vice President Vítor Constâncio said on Friday that the ECB is considering measures which mitigate the “immediate, direct impact” on banks of cutting the deposit rate further into negative territory. This is seen as the clearest hint yet that the ECB is considering a tiered deposit rate, where the more negative rate does not apply to all deposits but only certain parts.

Source: The Financial Times

Poll puts Fine Gael leader Enda Kenny and Fianna Fáil leader Michael Martin neck-and-neck for Taoiseach

A poll by the Irish Times and Ipsos Mori puts current Taoiseach and Fine Gael leader Enda Kenny, and Fianna Fáil leader Micheál Martin neck-and-neck as the public’s choice for leader. 24% of respondents said they prefer Kenny – the exact same said the prefer Martin. Sinn Féin leader Gerry Adams is supported by 12%, and Labour’s Joan Burton is on 4%.

Source: The Irish Times

Greek opposition leader says he would choose fresh elections over unity government

Greek opposition leader Kyriakos Mitsotakis has said, “SYRIZA must finally live up to its responsibilities as a ruling party. But if the dilemma is between forming a national unity government and going to elections, then I will choose elections.”

Source: Kathimerini

Protectionism cannot prevail if Britain is to flourish in post-Brexit world

Open Europe’s Nina Schick appeared on Dutch Public TV’s flagship political show, Nieuwsuur, arguing Open Europe’s research shows that UK can survive a Brexit, but that in order for the British economy to flourish outside the EU, it will have to seal a favourable trade deal with the EU, pursue a strong deregulation drive at home and have liberal and open economic policies – including on immigration. She discussed the ideological division in the Brexit side of the campaign between those who want Britain to leave to open to the world, and others who want to leave on a protectionist agenda. Meanwhile, on our blog, Raoul Ruparel, examines ‘Article 50’ – the mechanism to leave the EU, concluding that, “unless the UK is truly prepared to ‘go it alone’, any ‘unilateral withdrawal’ option is tricky.” Raoul is also quoted by the Financial Times discussing the economic impact of Brexit.

Open Europe’s Vincenzo Scarpetta is quoted by Prospect on the UK’s deal saying, “It is unfortunate that EU leaders’ reluctance to embrace Europe-wide reform has narrowed the scope of the negotiations to British exceptionalism. It is not simply the British public that wants a more competitive, democratic and less bureaucratic EU. The question now is not only whether the EU will ever be able to achieve radical reform, but whether there is an alternative that would better deliver British interests.” Writing in The Times, Ed Conway cites Open Europe research which found that the top 100 EU regulation cost around £33.3bn a year. However, were Britain to leave the EU and remain in the Single Market, like Norway, 93 of the 100 would still apply to the UK, at an annual cost of £31.4bn.

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