6 July 2016

Merkel’s party wants European Parliament President Martin Schulz to stand down as he makes people “angry” about EU

Members of Angela Merkel’s CDU/CSU Union have called upon Martin Schulz, President of the European Parliament and a member of Germany’s centre-left SPD, to step down when his term ends at the end of 2016. According to Die Welt, Schulz has become ‘persona-non grata’ at the highest levels of Merkel’s party, partly due to his reaction to the UK’s referendum vote, after which he called for a “genuine EU government” that would be directly elected, and controlled by the European Parliament and a second legislative chamber representing the member states.

“The SPD stands for everything that makes people angry at Europe,” CSU General Secretary Peter Tauber told Die Welt. Gerda Hasselfeldt, the Chairman of the CSU Group in the Bundestag, added, “The SPD falls into the typical socialist pattern. Where problems arise, it must be resolved with other people’s money, and there must be more centralisation and more government.” Julia Klöckner, a Vice-President of the CDU, told Die Welt, “There is an agreement, which is to change when his term ends. And given that Mr Schulz is a man of honour, I assume he will stick to his own commitment.”

European Commission President Jean-Claude Juncker rebuffed similar calls to step down over Brexit, telling MEPs in Strasbourg on Tuesday, “I refuse to let the Commission be blamed for the outcome of the referendum.” European Council Chief Donald Tusk urged national leaders to stop “often unfair” attacks on EU institutions. He added, however, that the EU cannot solve any serious problems “against the will of the member states.”

Dutch Prime Minister Mark Rutte yesterday said that the EU must not continue with a “business as usual” approach, as to do so would be “the worst possible response,” after the British referendum. He urged against further political integration and a federal Europe, “because that too would be a denial of the sentiment felt by many Europeans to whom the EU is – or has become – something remote and aloof.”

Source: Die Welt Frankfurter Allgemeine Zeitung EUobserver The Irish Times

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Business Secretary says growth must take priority over deficit as Carney warns Brexit risks beginning to ‘crystallise’

Bank of England Governor Mark Carney yesterday warned that the financial risks of Brexit “have begun to crystallise” and relaxed rules on banking capital, with the aim of releasing as much as £150bn in possible loans. The heads of Barclays, Lloyds Banking Group, Royal Bank of Scotland, HSBC, Santander, Nationwide Building Society, Metro Bank and Virgin Money signed a joint statement that they would “make the extra capital available to support lending to UK businesses and households in this challenging time”. Carney said that the resilience of the UK financial system could be seen in the fact that “overall bank funding costs have not increased”.

Meanwhile, in an interview with The Financial Times, Business Secretary Sajid Javid said the focus now was on “more economic growth”, suggesting that the combination of a downturn and a new fiscal stimulus could cause the budget deficit to rise from 3% of GDP to 5%. He called for corporate and personal tax cuts. Three UK commercial property funds worth about £10 billion pounds suspended trading and redemptions yesterday as investors sought to remove their cash. The pound this morning dropped to 31-year low against the US dollar and its lowest level against the euro since 2013.

Source: Bank of England The Financial Times The Wall Street Journal: Boleat The Financial Times 2 Politico The Times

Letwin: MPs will be consulted on withdrawal process but no parliamentary vote on Article 50 itself

Oliver Letwin, the Cabinet Office Minister tasked with preliminary Brexit planning, yesterday told MPs on the House of Commons’ Foreign Affairs Committee that triggering Article 50 would not require a vote in parliament as this would be done under the royal prerogative by the next Prime Minister. However, he claimed MPs would be consulted on the withdrawal process given their consent would be necessary to amend or repeal the 1972 European Communities Act which enshrines EU membership in UK law. Letwin added that his team could prepare a “fine grained, multi-dimensional” options paper to be reviewed by the new Prime Minister which would look at different forms of co-operation with the EU, as well as issues ranging from contributions to the EU to a successor to the common agricultural policy, tariffs, regulatory protection and the future of the City of London.

Source: The Times The Guardian The Sun

Labour to force vote on future of other EU nationals living in UK

Labour will table a motion today ruling out the use of around three million nationals of other EU member states living in the UK “as bargaining chips” in the upcoming Brexit negotiations and allowing them the right to remain in the UK. The motion could attract the support of many Conservative MPs unhappy with Home Secretary and Tory leadership front-runner Theresa May’s refusal to issue a clear statement to this effect. May reportedly told Tory MPs that she wants EU citizens already in the UK to be able to stay but her spokesman also added that “We need a logical, correct, practical approach because there are also British citizens abroad… we need to get our position right and we do not want to give away our negotiating position at the start.”

Source: The Guardian

Theresa May wins first ballot of Tory MPs with Andrea Leadsom in second

Home Secretary Theresa May comfortably won the first ballot of Conservative MPs yesterday with 165 votes out of 329 followed by Energy Minister Andrea Leadsom on 66 votes, Justice Secretary Michael Gove on 48, Work and Pensions Secretary Stephen Crabb on 34 and former Defence Secretary Liam Fox on 16. Fox was automatically eliminated while Crabb chose to withdraw, with both subsequently endorsing May. The second ballot – which will determine which two candidates will be voted on by party members – will take place tomorrow.

Source: The Times The Sun The Daily Mail

Boyes: UK should trade on its military contribution to European security

Writing in The Times, Roger Boyes argues that “The divorce negotiations with the European Union, if they follow the game plan of the European Commission, will fast degenerate however into a nightmarish battle over detail. Rather, what we should be seeking is a grand bargain whereby Britain’s over-the-odds military contribution is taken into account in return for access to the single market. It should be a deal that recognises a common interest in security and Britain’s disproportionately important role in fighting common enemies.”

Source: The Times: Boyes

EU set to formally sanction Spain and Portugal for missing deficit targets

Spain and Portugal are set to become the first Eurozone countries to be punished for not meeting their budget deficit targets. The European Commission said yesterday that they had not taken “effective action” to meet the Eurozone’s deficit rules, setting the scene for further action such as fines or the suspension of certain EU funds. Open Europe’s Vincenzo Scarpetta is quoted by Bloomberg as saying, “It’s a difficult decision for the Commission. It’s got to strike a balance between ensuring rules are seen as credible and enforced without creating political turbulence and hurting growth. Not fining Spain would not go down well in countries like Germany, but usually politics ends up trumping rules.”

Source: El País The Financial Times Bloomberg Bloomberg 2

EU-Canada trade deal needs ratification of national parliaments, EU Commission says

The European Commission yesterday made a formal proposal for conclusion and signature of the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada. Contrary to its initial intention, the Commission has eventually decided to consider CETA as a ‘mixed agreement’ – meaning that it will also need to be ratified by the national parliaments of all EU member states. However, CETA would provisionally enter into force after obtaining the approval of the Council of Ministers and the consent of the European Parliament.

Source: Open Europe Blog European Commission press release

French PM uses special constitutional powers again to skip parliament vote on labour reform bill

French Prime Minister Manuel Valls announced yesterday that he would again make use of special powers under Article 49(3) of the French Constitution to push through his government’s labour reform bill without a vote in parliament. The bill will therefore be considered as adopted unless a no-confidence motion is backed by a majority of French MPs within the next 48 hours – in which case the Prime Minister would have to tender his resignation. The centre-right opposition Les Républicains party will not be tabling a no-confidence motion. It remains unclear whether rebel MPs from the left-wing of the ruling Socialist Party will do so.  

Source: Open Europe Blog Le Monde The Wall Street Journal

Hungary to hold referendum on EU refugee quotas on 2 October

The Hungarian referendum on whether to accept an EU-wide mandatory quota system for the redistribution of asylum seekers will take place on 2 October, the country’s President Janes Ader announced yesterday. The exact question will be, “Do you want the European Union to be entitled to prescribe the mandatory settlement of non-Hungarian citizens in Hungary without the consent of parliament?” Separately, the International Organisation for Migration (IOM) has calculated that 227,316 migrants have arrived by boat to Europe this year – 67,000 are believed to have landed in Italy from North Africa.

Source: Reuters Politico Brussels Playbook Le Figaro

Second round of Austrian presidential election to be re-run on 2 October

The second round of the Austrian presidential election will be re-run on 2 October. The date was announced by Chancellor Christian Kern yesterday and needs to be confirmed by parliament – but that is a formality. The Austrian Constitutional Court last week annulled the result of the 22 May ballot, following a lawsuit from the far-right Freedom Party over alleged irregularities in the handling of postal votes. Far-right presidential candidate Norbert Hofer said in the wake of the UK’s vote to leave the EU that he would be in favour of holding a similar referendum in Austria unless the EU changes course away from further centralisation.

Source: The Financial Times Reuters Frankfurter Allgemeine Zeitung

Anti-semitism row causes split in Germany’s AfD party

Wolfgang Gedeon, a regional lawmaker for the populist Alternative für Deutschland (AfD) party,  resigned late on Tuesday after a row over his alleged anti-Semitic views. Thirteen AfD regional MPs in the southern German state of Baden-Württemberg had earlier quit the AfD’s regional parliamentary group – including Jörg Meuthen – the head of the state parliamentary group and the Co-Chair nationwide – after ten other members did not support a motion to expel Gedeon. Meanwhile, a Forsa poll for Stern/RTL, puts Angela Merkel’s CDU/CSU on 35% (+1), the centre-left SPD on 21% (-1), the Greens on 13 (+1), the Left party on 10% (+1), the AfD on 9% (-1), and the FDP on 6%.

Source: Frankfurter Allgemeine Zeitung Süddeutsche Zeitung Die Welt

Julian King to be nominated as UK’s new Commissioner

Sir Julian King, the UK’s current ambassador to France, is to be nominated as the UK’s new European Commissioner following the resignation of Lord Jonathan Hill who held the Commission’s financial services portfolio.

Source: Politico