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May 31, 2016

Grand Coalition below 50%

The Insa polls, as reported by Bild, tend to register the lowest support for the grand coalition parties in Germany. We find them useful because they seem to register shifting trends earlier than others - although we have no idea whether the actual numbers are reliable. What is special about the latest poll is that the grand coalition has fallen below 50% for the first time ever. 

There is nothing magical about 50%. Because "others" have 5.5% - and are not represented in the Bundestag - the 49% joint vote of CDU/CSU and SPD still translates into a majority if the two parties decided to form another coalition. But we should get used to not calling them "grand" any longer. We would also like to recall that the grand coalition currently has 80% of the seats in the Bundestag. This is because neither the FDP nor the AfD managed to surpass the 5% voting threshold last time. For this reason alone, the 2017 elections will bring big political change. This means, for example, that the new Bundestag is going to be far less likely to agree debt relief for Greece than the old one. There would be a majority for debt relief today - as the SPD and the Greens support it. But it is far from clear whether such a majority will exist in the new Bundestag, as both AfD and FDP would vote against it - as would parts of the CDU/CSU.

For the SPD and CDU/CSU, these are historic low points. We expect the trend to continue for now - though they might recover ahead of the elections. We would not exclude the possibility that the AfD could end up with a larger share of the vote than the SPD - though the party is always at risk of imploding: the party leader, Frauke Petry, is under investigation over making false claims under oath, and her deputy has over the weekend outraged the nation with a statement that nobody wanted to live next to Jerome Boateng, the German footballer. If the CDU/CSU falls below 30%, we would assume that Angela Merkel's leadership becomes an issue for debate in the party.

Here is the latest Insa poll: 

CDU/CSU30
SPD19
Greens13
Left9.5
FDP8
AfD15
Others5.5
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May 31, 2016

Strikes to continue in France

Strikes in France will continue this week, just ahead of the Euro 2016 football tournament which starts June 10. There will be a nationwide protest day on June 14. Three trade unions from the railway company SNCF will join the protest against the labour law today. Air France pilots are also preparing for a six-day strike, after 68% of its union members voted in favour. Air traffic controllers are expected to join the protests, as well as metro conductors in Paris. The unions also started to block waste recycling centres, according to Journal du Dimanche. Six out of eight refineries are still blocked, and 653 out of 2,200 petrol stations ran out of fuel. 

In an article in Sud-Ouest Francois Hollande reaffirmed that there will be no changes in the labour law, and that the contested article 2 is there to stay. Philippe Martinez from the CGT signalled on Sunday that he is ready to negotiate with the government, Les Echos reports. The CGT had previously been calling for a complete withdrawal.

Polls show that the French support a labour reform in principle, but just not this El Khomri law. They disapprove of the CGT’s method of protest, but blame the government for it. The government has launched a new offensive to win back public opinion.

Natalie Nougayrède reminds us in the Guardian that French trade unions represent only 7% of the active population, mostly employees already in highly protected sectors. She said a Socialist government has never faced such a level of social unrest. In this climate young people are prone to mobilise against any type of reform they perceive as damaging to their chances of entering the protected sector. While other countries have reformed in recent years, France has hung on rigidly to its welfare state and has been unable to adapt to globalisation. Retreating from the reforms would send the wrong signal, she says.

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May 31, 2016

Which crisis will blow up first?

Wolfgang Munchau takes stock of the three biggest threats facing the EU at the beginning of this year - Grexit, Brexit, and the refugee crisis, and notes that so far only the first has been addressed. There will be no Grexit this year or in 2017, but the agreement still does not add up because debt relief is very unlikely to happen, given the politics of Germany. On Brexit, the Remain campaign seems have taken a lead - though Leave seems to have pulled back in the latest polls, which show the two sides running neck and neck. The biggest unresolved problem is the refugee crisis. The political impact seems to be lower with the closure of the Balkan routes and the Turkey agreement, both of which acted as a disincentive for refugees. But Munchau believes that the Turkey deal is unlikely to hold up because of President Racep Tayyip Erdogan's categoric refusal to accept the EU's conditions for visa liberalisation, and the critical importance of that subject for the refugee part of the agreement itself. Munchau says of all the multiple crises facing the EU, this is the one with the biggest potential to go wrong, though Brexit would be the one with the biggest shock potential in the short run. 

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May 31, 2016

Verhofstadt loses patience with the pro-Europeans

Guy Verhofstadt has published an op-ed in El Español, surprisingly critical of the European Union. Verhofstadt has little patience for those pro-Europeans who defend a dysfunctional EU because it's better than nothing, saying that the current EU is far from what the founders envisaged. He blames successive generations of European politicians for their failure to move the EU forward since the adoption of the euro at the end of the 1990s. Citizens, he says, are exasperated by the union's inability to create jobs, watch its borders, protect itself from threats, or keep alive its principles and foundational values. Not surprisingly, he blames the philosophy of intergovernmental coordination that dominates since the early 1990s, and advocates a federal solution to the EU's problems. This includes own resources for the eurozone to guide investment and correct imbalances, a common security capacity, common border and rescue forces, and a common asylum and immigration policy. Not to do so would condemn the EU to another 20 years of stagnation and its possible dissolution. 

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