17 February 2016

Leaked memo highlights fears of ‘reform contagion’ from UK-EU deal

The Daily Telegraph reports that a leaked diplomatic text reveals how Belgium, France, Hungary and Spain will seek amendments to the UK-EU deal in a bid to prevent a ‘contagion’ of reform across Europe. Spain fears that Britain is seeking to cut the European Central Bank’s regulatory power, and fears the UK will be “an obstacle in decision making.” Hungary says the migrant benefit curbs must not be “retroactive” and “penalise” current migrants in Britain, and must only be activated if there is “evidence”. Reuters reports that, according to an unnamed CDU/CSU party official, German Chancellor Angela Merkel told a party meeting, “There can’t be a situation where the British financial sector is less regulated than the euro zone.”

The leaked document also shows that Belgium fears a “risk of contagion” and says that Britain’s proposed opt-out on ever closer union “can be no target for other member states.” Speaking in Brussels yesterday, Polish Europe Minister Konrad Szymański stressed that the indexation of child benefits for non-resident children was a “specific solution to a specific British problem” and not a template for other member states to adopt.

The Times reports that senior Whitehall figures are preparing a Plan B in case the summit fails this week. British officials acknowledge that it would “look messy” but emphasise that there could be an emergency summit in two weeks to secure a better deal — and they could still hold a referendum on June 23.

Meanwhile, following the Prime Minister’s meetings in the European Parliament yesterday, Downing Street said that the leaders of the three largest groups of MEPs had “made clear their support” for Britain’s proposed reforms. They are likely to issue a joint statement on Friday if a deal is completed. The Financial Times quotes Manfred Weber, head of the centre-right EPP group, the largest in the Parliament, as saying: “From my point of view, I can absolutely guarantee that we will do whatever we can do after a compromise, after a positive yes vote, to come quickly to legislative results.” However, The Times quotes an EU official as saying, “The parliament is unpredictable. It can be monkeys with guns.”

Open Europe’s Nina Schick appeared on BBC Newsnight arguing that the measures to safeguard the rights of non-Eurozone countries have deliberately been kept vague, and pose a stumbling block in the EU renegotiation as Eurozone countries are afraid of giving Britain a veto over the bloc.

Source: The Daily Telegraph The Daily Telegraph 2 The Times The Daily Mail The Guardian The Independent The Financial Times Reuters

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Bundesbank hits out at ECB bond buying in hearing at German Constitutional Court

The German Constitutional Court yesterday began its hearing into the challenge against the legality of the ECB’s bond buying programme – Outright Monetary Transactions (OMT). Defending the policy ECB Executive Board Member Yves Mersch warned that the ECB “must be able to decide independently on future monetary policy, in order to fulfill its duty of maintaining price stability in the euro area”. Mersch also actively argued, “A monetary union is a community of liability”. German Deputy Finance Minister Jens Spahn also defended the programme noting that the Bundestag has a say over whether it is needed and added that he had “doubts as to whether it would ever come to [using] an OMT programme”.

On the other side Bundesbank President Jens Weidmann expressed his dislike of bond purchase programmes but added “I see quantitative easing (QE) as less problematic than OMT”. He also argued that QE is “no longer necessary” for the Eurozone. Another plaintiff, lawyer Markus Kerber accused the ECB of being a “financial dictator”.  Die Linke MP Gregor Gysi told the court, “The ECB is claiming powers that were never transferred to it. We didn’t grant the ECB the power to be inventor, enforcer and controller of the OMT.”

Source: Reuters The Financial Times The Irish Times Bloomberg Frankfurter Allgemeine Zeitung

European business groups call on UK to remain in “competitive and outward-looking” EU

In a letter to the Financial Times organised by the CBI, the heads of business groups from 21 European nations argue that “The EU must improve the functioning of the single market, particularly in services and digital; sign more high-quality trade deals; and take a better approach to regulation”, before concluding that “European business strongly supports continued British membership of an EU that takes the necessary reforms to be competitive, outward-looking and continue delivering growth, jobs, peace, security and prosperity for all.”

Source: The Financial Times The Financial Times: Letters The Daily Telegraph

60% of BCC members back remaining within EU but 63% say renegotiation deal not a factor

Nearly two-thirds (63%) of the senior businesspeople polled in a major British Chambers of Commerce survey have revealed that the outcome of the UK-EU renegotiation is unlikely to change how they will vote. 60% of individual businesspeople said they would vote to remain, down slightly from 63% in September, and 30% would vote to leave – up slightly from 27%. Views vary between categories of business with those exporting only to the EU expressing the strongest support for “remain” while those exporting only outside the EU expressing the strongest support for “leave”.

Source: The Times: Red Box

New poll shows large majority of Europeans think the UK should remain in the EU

According to a new Lord Ashcroft poll of 28,720 people across all 28 EU member states published by The Sun, 60% of total respondents said the UK should remain a member of the EU – with only 10% saying it should leave and 30% saying it would not matter either way. Lithuania (78%), Portugal (74%) and Ireland (72%) are the three member states where support for the UK staying in the EU was the highest. The poll also showed that the UK is the second most popular country in Europe, with a ‘favourability ranking’ of 72 out of 100 – behind Sweden on 74 out of 100.

Source: The Sun

Kensington Palace deny Prince William signals support for Remain

Kensington Palace has denied that Prince William was referring to the EU referendum after giving a speech at the Foreign and Commonwealth Office yesterday, in which he described Britain as an “outward looking nation” with a “proud tradition of seeking out allies”.

Source: The Daily Telegraph The Times The Daily Mail

Former head of British Army warns of consequences of a Europe “broken and demoralised” by Brexit

In a letter to The Times, Field Marshal Lord Bramall, the former head of the British Army, has argued that “a broken and demoralised Europe just across the Channel, lacking the practical influence of this country, would constitute a far greater threat to our future, indeed to the whole balance of power and equilibrium of the western world, than having to continue to endure some irritating and unnecessary meddling from Brussels.”

Source: The Times: Lord Bramall

Theresa May uses speech to make case for international cooperation on terrorism and security

In a speech in Washington DC last night, Home Secretary Theresa May warned that the UK can “no longer look simply to domestic solutions” to keep the country safe. “It is no good arresting a person in your own country, if they cannot be brought to justice in theirs,” May said. “It is no good ensuring world class aviation security at home, if people are not properly screened at airports abroad.” The Daily Telegraph suggests that, while the remarks primarily dealt with Britain’s national security work with America, New Zealand, Australia and Canada, the call for closer co-operation will be read in the context of the EU debate.

Meanwhile, The Daily Telegraph also reports that the number of convictions for EU-born nationals has risen by nearly 40% over the past five years, according to police figures. Over the same period the number of EU-born citizens living in Britain has risen by 30%. However, offenders from the EU (37,000) still make up a relatively small number of the overall 1.2 million individuals convicted in Britain last year.

Source: The Daily Telegraph The Daily Telegraph 2

Public figures with Commonwealth ties call on PM to back Brexit

In an open letter to Prime Minister David Cameron, 80 public figures with ties to the Commonwealth have backed the Vote Leave campaign and said that Brexit offers “an opportunity to rediscover Britain’s global vocation”. The letter argues that some businesses are struggling to recruit the talent they need from outside the EU due to immigration restrictions and that the UK would be better off leaving the EU so it can strike free trade deals with Commonwealth states.

Source: The Financial Times Vote Leave

Latest poll ahead of Irish election sees small drop in Fine Gael support

The latest Red C poll for the Irish Sun puts Irish Taoiseach Enda Kenny’s Fine Gael on 26%, a two percentage point drop compared to last week’s Red C poll for the Sunday Business Post, ahead of Fianna Fáil on 19% (+1%), Sinn Féin on 17% (-3%), Labour on 9% (+1%), with smaller parties and independents candidates on 29%. Meanwhile, Tánaiste and Labour leader Joan Burton ruled out the possibility of Labour going into coalition with Sinn Féin, but refused to rule out doing a deal with Fianna Fáil, only saying that her “exclusive focus at the minute” is returning a Fine Gael and Labour coalition.

Source: The Irish Times The Irish Times 2 The Irish Independent

Juncker calls for European finance minister to distribute fund in migrant crisis

European Commission President Jean-Claude Juncker says in an interview with Bild that the migration crisis shows that Europe “cannot afford” to take steps back in terms of integration and calls for “a European minister of finance who will efficiently administer the European funds and allocate them to where they are most needed.” Asked about German Chancellor Angela Merkel’s policies on the crisis, he says he is confident that “history will prove her right,” and that, “I would have preferred it if everyone had realised as quickly as Chancellor Merkel that the refugee crisis can only be solved through a joint effort – just like the debt crisis before. But the motto is often ‘every man for himself’!” However, Frankfurter Allgemeine Zeitung reports that Austrian Chancellor Werner Faymann – whose country has introduced daily caps on the number of refugees it allows into the country – has said that he expects Germany to soon adopt a similar model.

Source: Bild Frankfurter Allgemeine Zeitung

Greek government expects bailout review to be completed “very soon” without specifying when

A Greek government spokesperson said yesterday that Greece expected officials from its creditors to return to Athens and approve the current bailout review “very soon”, without specifying when. The spokesperson added, “Greece is determined to abide by the agreement it signed in July 2015 but it is not prepared to go even half a step beyond that.” Meanwhile, a report by the European Court of Auditors has found that the European Commission’s task force for Greece had “only mixed results in terms of influence on the progress of reform” and that the “the system did not always prove effective”. These shortcomings are partly put down to the fact the taskforce was hastily constructed during a crisis.

Source: Kathimerini European Court of Auditors

EU attempts to reduce reliance on Russian gas

In an attempt to reduce reliance on Russian natural gas, the European Commission has proposed a plan to vet energy contracts that are made by member states with countries outside the EU. The plan would force member states to provide advance notice of any gas-supply deals with details on the daily volumes of gas to be shipped and the conditions under which these supplies can be suspended. If the EU does not deem the contract sufficient, they can make suggestions that countries will have to consider or risk having to go to court. The hope is that by looking at the contracts, the EU would be able to see where they can get better energy deals.

Source: The International New York Times

Ukrainian PM survives no confidence vote despite President calling on him to resign

Ukrainian President Petro Poroshenko has asked Ukrainian Prime Minister Arseniy Yatsenyuk to resign and called for a “complete reset of the cabinet”, arguing, “The cabinet has lost the coalition’s trust.” The criticisms were largely based on the lack of progress in reforming Ukraine. However, Yatsenyuk yesterday survived a no confidence vote in parliament.

Source: BBC News The Financial Times

Sarkozy’s presidential ambitions suffer blow as he is placed under investigation as part of campaign funding probe

Former French President Nicolas Sarkozy has been placed under formal investigation as part of a probe into allegedly illegal overspending during his unsuccessful presidential campaign in 2012. The measure does not automatically mean that Sarkozy will have to stand trial. However, it is seen as a blow to his ambitions of winning the centre-right presidential nomination in a primary election that is expected to take place later this year.

Source: BBC News The Financial Times Le Monde

EU Wargames: The challenges facing UK negotiators inside and outside the EU

Ahead of this week’s crucial EU summit meeting, at which Prime Minister David Cameron hopes to finalise his EU renegotiation, Open Europe has published a new report setting out the conclusions and lessons of its ‘EU Wargames’ – a unique simulation of both the current UK-EU renegotiation and what might happen if there was a referendum result in favour of Brexit. We believe they are the closest the public can get to being inside the negotiating room. The simulated negotiations provided a number of lessons which are now being borne out in reality. You can view video highlights on our website.