18 February 2016

Merkel: UK renegotiation demands are “justified”, keeping Britain in EU “is in our national interest”

German Chancellor Angela Merkel made a strong plea for Britain to remain in the EU in the Bundestag yesterday, saying that David Cameron’s demands are “justified” and are in the interest of the EU as a whole. On the reform of EU migrants’ access to in-work benefits, Merkel argued, “It goes without saying that each [EU] member state must be able to protect its social system from abuses.” She added that she agreed with Cameron that non-Eurozone countries need to have safeguards, but any deal with the UK would not get in the way of further Eurozone integration. She concluded, “I am convinced it is in our national interest that the UK remains an active member in a strong and successful EU.”

French Prime Minister Manuel Valls told parliament yesterday that “we believe and hope” that a deal can be struck at this week’s EU summit, “because the UK’s departure would be a shock, whose consequences for Europe are hard to imagine.” However, he added, “Europe must remain a space of solidarity among [member] states. One cannot choose à la carte depending on what suits us.” Italian Prime Minister Matteo Renzi told MPs that “all the necessary efforts must be made to keep the UK in the EU”, adding that “the centrality of the euro” is one of “the limits Italy must stick to.” Irish Taoiseach Enda Kenny has said he will “talk up for Britain” at the EU summit, adding that “consequences of failure [to reach an agreement] would have a direct impact on the Irish economy.” European Council President Donald Tusk said yesterday, “After my consultations in the last hours I have to state frankly: there is still no guarantee that we will reach an agreement.” Last night Sweden’s Prime Minister Stefan Löfven said “I am ready to accept the compromise if that is what’s needed to secure an agreement.”

Open Europe co-director Stephen Booth appeared on Bloomberg TV this morning discussing the EU summit, and is also quoted by German weekly Die Zeit. Open Europe’s Vincenzo Scarpetta appeared on Swiss state radio RTS and Share Radio yesterday. Open Europe’s live twitter coverage of Merkel’s speech in the Bundestag was cited by The Guardian. Follow our live blog on key developments today here.

Source: Open Europe Live Blog BFM TV The Guardian: Politics Live Blog Die Zeit The Irish Times European Council invitation letter

Latest draft deal shows UK is facing resistance on safeguards for non-Eurozone countries

In the latest draft of the UK-EU deal, published by the Financial Times, the section concerning the relations between Eurozone and non-Eurozone countries has been changed from previous versions – after France and other euro area countries voiced their concerns that the deal would allow for a preferential treatment of UK-based financial institutions. The draft now stresses that “the single [EU] rulebook is to be applied by all credit institutions and other financial institutions in order to ensure the level-playing field within the internal market” – while still allowing non-Eurozone countries to adopt “specific provisions”. A paragraph stating that the national authorities of non-Eurozone countries are the sole responsible for the supervision and resolution of their financial institutions now appears in square brackets – a sign of lack of agreement among member states. The latest draft also features a different, more vague wording on how the ‘emergency brake’ on EU migrants’ access to in-work benefits would be triggered – in what could be seen as a bid to appease the European Parliament. The new draft also stresses that EU member states “acting in their capacity as members of the Council [of Ministers]” will do “all within their power to ensure the rapid adoption” of changes to the rules on EU migrants’ access to benefits.

Meanwhile, The Times reports that French President François Hollande is going to oppose UK demands that the deal include a commitment to future EU Treaty change. The paper quotes a French diplomat as saying, “Any deal must respect the existing Treaties. It is not a revision of the Treaties. If you agree that the negotiation is not Treaty revision, why do you need a protocol for a future Treaty change?” Other questions remain open, as in previous drafts, including: the length of time the emergency brake will apply for and how many countries can trigger the safeguard for non-Eurozone states. Meanwhile, RTE reports that Ireland is seeking a special deal to ensure that the emergency brake on migrants access to in-work benefits does not apply to Irish workers in the UK.

Source: The Financial Times: Brussels Blog The Times RTE

Boris Johnson still on fence over EU ahead of publication of new parliamentary sovereignty package

London Mayor Boris Johnson yesterday received a private preview from Prime Minister David Cameron of a package aimed at reasserting the parliamentary sovereignty vis-à-vis the European Court of Justice being drawn up by Cabinet Office Minister Oliver Letwin. Leaving Downing Street, Johnson told journalists, “I’ll be back, no deal”. Johnson is expected to formally declare his stance on EU membership in the next couple of days with a number of sources saying that he is “genuinely conflicted” on the issue. Meanwhile, The Sun reports that Armed Forces minister, Penny Mordaunt, is set to play a leading role in the leave campaign.

Seperately, a new Ipsos MORI poll has support for Remain at 51% and support for Leave at 36%, 13% undecided. The poll also found that 32% of respondents said that Johsnon would be important to them in deciding how to vote in the referendum, second only to Cameron himself (44%) and ahead of Home Secretary Theresa May and Chancellor George Osborne (both 28%) and Labour leader Jeremy Corbyn (27%).

Source: Open Europe blog: Domestic options to safeguard sovereignty The Daily Mail The Times Evening Standard

New figures show number of EU nationals working in the UK exceeds 2 million

New Labour Force Survey figures released yesterday showed that total employment in the UK as of December 2015 stood at 31.4m of whom 28.3m were UK nationals, just over 2m were nationals of other EU member states, and 1.2m nationals of non-EU states. Compared to the previous year, employment increased by 532,000 of whom 215,000 were EU nationals. The unemployment rate stands at 1.7m, a rate of 5.1% – the lowest for a decade.

Source: The Times The Daily Mail

EU-Turkey mini-migrant summit cancelled in wake of Ankara attacks

A mini-migrant summit scheduled to take place on the sidelines of the EU leader’s summit has been cancelled in the wake of terror attacks in the Turkish capital, Ankara, on Wednesday. Turkish Prime Minister Ahmet Davutoğlu will not travel to Brussels today, where he was due to meet leaders of eleven EU countries in a “coalition of the willing,” to discuss concrete measures to tackle the migrant crisis. The host, Austrian Chancellor Werner Faymann, said that he wants to coordinate a new date “as soon as possible.”

Separately, German Chancellor Angela Merkel yesterday told the Bundestag that it would be the EU’s common goal to “dramatically decrease” the numbers of migrants arriving, whilst “still protecting those who really need our help.” She added that the EU’s failure to relocate an agreed 160,000 asylum seekers around the bloc had made the redistribution quota “laughable,” and that solutions to the crisis should instead focus on securing the EU’s external borders – including its maritime border – and striking a deal with Turkey. “It is high time to look for European solutions instead of national solutions,” Margrethe Vestager, the EU Competition Commissioner told Handelsblatt.

Meanwhile, The Daily Mirror reports that David Cameron will offer police and patrol ships to help cope with migrant crisis. They say he will offer helicopters, two border patrol boats, and police from the National Crime Agency to help Turkish coastguards.

Source: Handelsblatt Handelsblatt 2 BBC Frankfurter Allgemeine Zeitung Daily Mirror

Leading fund manager says Brexit could benefit economy in short term

A report conducted by Capital Economics, commissioned by a leading fund manager, Neil Woodford has found that, if Britain left the EU, “It is plausible that Brexit could have a modest negative impact on growth and job creation. But it is slightly more plausible that the net impacts will be modestly positive.” Woodford argued that the report shows that much of the debate around Brexit was “bogus” and “If we stay or we leave, the fundamentals of the economy will be relatively unmoved… It will be a significant event globally that may well be reflected in weakness of sterling, but that will be relatively temporary. If the currency is weaker for a period, that will be potentially stimulative for the economy, so it might actually work out to be good news for exporters”.

Source: The Guardian

AA warns that petrol could rise by 19p a litre if UK leaves EU

AA have warned that the price for petrol could increase by up to 19p per litre if the UK voted for Brexit. The predictions were made on the basis of Goldman Sachs claiming that the pound could fall by 20% if the UK votes to leave the EU. President Edmund King said, “Financial reports suggest leaving the EU could lead to a sharp fall in the value of the pound which in turn could hit pump prices within days. The instability of the pound — combined with Opec countries already looking to freeze oil output and the usual increase in fuel use during the US motoring season — could mean a significant hike in petrol costs.”

Source: The Sun

Renzi: We would veto Eurozone-wide cap on banks’ government bond holdings

Italian Prime Minister Matteo Renzi told parliament yesterday that Italy “will veto any attempt to put a ceiling on government bonds in banks’ portfolios.” Danièle Nouy, the head of the ECB’s new supervisory arm, last year proposed capping Eurozone banks’ holdings of national sovereign debt at 25% of a bank’s equity.

Source: Reuters Il Sole 24 Ore Corriere della Sera

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