1 February 2016

Hopes of deal at February summit kept alive as UK and EU officials enter ‘crucial’ 24hr talks

David Cameron and European Council President Donald Tusk are set for a “crucial” day of talks about the UK’s renegotiated membership of the EU. Tusk left a meeting in Downing Street yesterday saying “No deal yet”. An EU source has said that, after further talks today, “Tusk will assess the situation and decide on whether to table a proposal or not.”

No 10 said it had secured assurances that a proposed “emergency brake” on welfare payments to EU workers could be triggered on the basis of present levels of immigration – the Government wants the brake to be triggered immediately after the referendum, allowing it to reject claims that the brake is under the control of the EU. A spokesman said, “The Commission have tabled a text making clear that the UK’s current circumstances meet the criteria for triggering the emergency brake.” However, one critical stumbling block is the UK’s demand the mechanism be allowed to remain in place “long enough to resolve the underlying problem” – perhaps as long as seven years.

The Financial Times reports that Tusk’s officials will also spend the next 24 hours trying to resolve French concerns over Britain’s proposed safeguards for non-Eurozone countries in the single market. Meanwhile, The Sunday Times reported that Tusk’s proposal will give national parliaments the ability to issue a “red card” to EU legislation if 60% of them oppose it. The votes would be weighted so parliaments in large countries such as Britain had more influence. The UK has reportedly also insisted on measures to crack down on the use of sham marriages to get around the UK immigration system.

Open Europe’s Stephen Booth appeared on BBC 5 Live on Sunday morning discussing the plans for the ‘emergency brake’ on migration and welfare, noting that unless the brake is triggered immediately it would be of little value to David Cameron in the referendum campaign.

Source: The Times The Times 2 The Times: Leader The Guardian Daily Telegraph The Sun The Financial Times The Financial Times 2 The Sunday Times

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Mark Pritchard: In an unsafe world, Britain is safer in the EU

Conservative backbencher Mark Pritchard MP, a long-standing supporter of a referendum on EU membership and widely regarded as a staunch eurosceptic, wrote in The Sunday Times, “In recent months, I have come to the view that, on balance, Britain should remain in the EU…When it comes to national security and international diplomacy, Europe and Britain need each other…In an unsafe world, Britain is safer in the EU, and Europe is safer with Britain at the very heart of Europe’s diplomatic and foreign policy.” Former Defence Secretary Liam Fox MP appeared on BBC Radio 4’s The World This Weekend programme, where he called on eurosceptic MPs to maintain their “integrity” and vote to leave the EU. He argued, “Remember that the judgment you make will reflect upon your judgment, politically, for the rest of your career… In the end, MPs need to do what they believe is right for the country, not what is right for them.” Separately, Steve Baker MP, co-chair of Conservatives for Britain, told the Sunday Politics show that he expects 50 to 70 Conservative MPs to campaign for Brexit, and that there would have to be “material changes” at the Vote Leave campaign to give MPs a greater role.

Meanwhile, The Sun on Sunday cited Open Europe’s EU Wargames and featured two op-eds by Lord Lamont and Sir Malcolm Rifkind – who played the UK in the reform and Brexit sessions of the EU Wargames respectively. Lord Lamont argues, “There are challenges in being outside the EU and risk in remaining in. But one thing that will make me vote to leave is a scare campaign.” Sir Malcolm writes, “We enjoy the best of both worlds in Europe… We are not interested in joining the Eurozone. Likewise, we are not part of the Schengen area. We continue to control our own borders… we already have a relationship with the EU that largely suits us.”

Writing in City AM, John Hulsman, who moderated Open Europe’s EU wargames, argues that the game illustrated that “facts alone do not rule the world,” adding that Europe’s leaders “still yearn for and believe in a united, politically-intertwined Europe that simply will never successfully exist. To not believe this dogma is to be a heretic, and treated as such.”


Axa warns EU referendum like “Russian roulette” while Hitachi says it will continue to invest in Britain no matter what

Axa Chief Executive Henri de Castries has said that the UK is right that the EU is “pretty dysfunctional” and needs to reform but warned that there would be “very serious consequences” from Brexit for the City. He also warned on referenda generally saying, “People never answer the question asked. The response depends on their mood. It is like playing Russian roulette with not six bullets in the barrel but at least four.”

Centrica CEO Iain Conn said in an interview with The Times that staying in the EU would be “beneficial” since “Europe is fundamental in setting our energy prices…So it really is in Britain’s interest to work to make the European energy system as efficient as possible.” He added that the UK would have little influence on the system from outside. Bats Global Markets Inc., which runs US and European stock markets, has warned that a Brexit could lead to it shifting all of its operations inside the remaining EU.

Meanwhile, Hitachi Chairman Hiroaki Nakanishi said that it was “preferable” for the UK to stay in the EU but that he can’t say Brexit is the “wrong way”. He added that his company will continue to invest in the UK no matter what.

The Sunday Telegraph reported that the new Conservatives for Reform in Europe group has attracted a £250,000 donation from Andrew Cook, Chairman of William Cook Holdings Ltd an engineering firm. Cook is reported to have previously backed more eurosceptic campaigns including Business for Sterling.


Polls show mixed picture on EU referendum outcome

A ComRes poll for Saturday’s Daily Mail found support for remaining in the EU at 54% with support for leaving at 36%, with 10% undecided. The poll also found that 35% said the UK’s security would be better off in the EU, with 24% saying it would be better outside the EU and 36% saying it would make no difference.

However, a YouGov poll puts Leave in the lead on 42% with Remain on 38% and undecided on 18%. The poll also found 53% of people support the Government’s decision to renegotiate the UK’s position in the EU and then hold a referendum on the issue.


Merkel expects refugees to return home after conflict subsides

Speaking to a gathering of refugees in Eastern Germany yesterday, German Chancellor Merkel said that “We expect that when Syria is at peace again and that when IS has been defeated in Iraq, you will return to your home countries with the learning that you have received here.” Merkel’s comments were criticised by the Greens’ co-chair Simone Peter who described them as a “sad retreat from the welcome culture.” Writing in Frankfurter Allgemeine Zeitung, Labour Minister Andrea Nahles argues that “Those who come here looking for shelter and who want to start a new life with us, must adhere to our rules and values. Those who signal that that they do not want to integrate will have their benefits reduced.” Rheinishe Post reports that the cost to the German state of hosting refugees will be in the region of €50bn over the next two years.

Meanwhile, Frauke Petry, one of the leaders of Germany’s nationalist Alternative für Deutschland party, has hit the headlines after suggesting that German border police ought to use force to prevent further refugees and migrants from entering German territory, including “the use of firearms if necessary”. Responding to the comments, SPD leader and Vice-Chancellor Sigmar Gabriel told Bild am Sonntag that “In my view the AfD belongs in a report of the Federal Office for the Protection of the Constitution and not on TV.” However, despite widespread condemnation of Petry’s comments, politicians from both the CDU and Die Linke have rejected the idea of placing AfD under formal observation.


Gerry Adams: Brexit would have “very profound” implications for Northern Ireland

Sinn Féin president Gerry Adams has argued that “If the people of Britain want to leave the EU, that is a matter for them, but that would have repercussions for people on this island; but particularly the fact that those of us who live in the North are going to be dragged with them if that is what they so decide would have very profound implications.” Adams also raised concerns that setting aside aspects of the European Convention on Human Rights would have a “really profound effect on the Good Friday Agreement.”


John McDonnell: Labour has own vision of EU reform

In an interview on the BBC’s Sunday Politics programme, Labour’s Shadow Chancellor John McDonnell argued that although he voted against Britain’s membership of the EEC in 1975, “that’s long gone now, we’re in Europe, we’re working with other socialist and social democratic parties within Europe to see how we can make Europe fairer, particularly with regard to workers’ rights, employment rights. Take this tax [avoidance] issue, we need to be within Europe to ensure that we can secure those agreements about a fair tax system on companies.” He added that “Withdrawal from Europe at the moment, we think would not be beneficial… that doesn’t mean to say we accept the EU is a perfect institution, we want to see reform.”

He also argued that the UK ought to take in its “fair share” of the four million migrants and refugees projected to arrive in Europe between 2015 and 2017, adding that “Inevitably in this century we will have open borders. We are seeing it in Europe already.”


The Times: EU considering plans to prosecute charities and tourists who help migrants arriving in Greece

The Times reports that documents seen by European civil liberties watchdog, Statewatch, reveal that in an attempt to reduce the flow of migrants between Greece and Turkey, the European Union is considering plans to prosecute volunteers who help migrants that arrive onto the Greek islands by criminalising them as “smugglers”. In order to protect those who have volunteered on the Greek island, EU legislation provides exemptions for “humanitarian assistance” to avoid accusations of these people helping smugglers. However, the rules being drawn up will remove the exemption and require all people that want to volunteer to help those arriving in Greece to register with police first.

Open Europe’s Vincenzo Scarpetta appeared on Italian public broadcaster Radio 1 Rai on Sunday, discussing the future of the passport-free Schengen area in light of the ongoing refugee crisis.


Greek government caught between creditors and domestic opposition on pension reform

Kathimerini reports that, during a recent meeting, IMF Chief Christine Lagarde told Greek Prime Minister Alexis Tsipras that the current Greek pension reform proposal would not be adequate. Meanwhile, farmers in Northern Greece have vowed to continue their protests against the pension reform plans.


ECB purchases fail to revive asset backed securities market in the Eurozone

The Wall Street Journal reports that, despite the ECB launching a programme to buy up Asset-Backed-Securities (ABS), the level of ABS issuance remained flat in 2015, with the overall size of the market set to decline for the seventh straight year.


EU considers new rules on banks' holdings of sovereign debt

Bloomberg reports that discussions are underway in the EU over whether to limit banks’ holdings of sovereign debt. One option under discussion is a limiting risk free sovereign debt to 25% of a bank’s eligible capital with any amount above this assigned come level of risk.


US and EU scrambling to reach new deal on data sharing and privacy

US and EU officials are scrambling to reach a deal on new “safe-harbour” rules on data sharing between the two sides ahead of tomorrow’s deadline. The lack of a deal could complicate commerce between the two sides and lead to a further divergence in data rules. A key sticking point remains EU concerns over lack of transparency from the US side on how it collects EU citizens’ data for intelligence purposes.


US hits out at Commission for targeting US firms in tax probes

Robert Stack, the US Treasury official in charge of international tax policy, has hit out at the European Commission saying, “We are concerned that the EU commission appears to be disproportionately targeting US companies.” He added, “We are greatly concerned that the EU commission is reaching out to tax income that no member state had the right to tax.”


Commission imposes duties on Chinese steel though industry sees them as too low

The European Commission has imposed provisional duties of between 9.2% and 13% on Chinese rebar steel in an attempt to protection the sector from unfair competition from subsidises Chinese producers. However, Gareth Stace, director of the UK Steel lobby group, said, “Unless these provisional duties are increased, then we will see further job losses in the rebar sector.” The duties will last six months while a full investigation continues after which more definitive measures will be decided upon.


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