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June 06, 2016

Leave's lead is widening

One thing we noted about the Guardian is that it hides its most shocking pro-Brexit opinion polls, like those of ICM last week, deep down on the webpage. We also only accidentally stumbled upon the latest poll of the Observer, part of the Guardian group, which confirmed the recent trend. It's 43% in favour of Brexit, against 40%. According to this poll the Remain campaign lost four points over the last two weeks. What seems to have happened is that voters are responding to the Leave campaign's message on immigration, which is now taking centre-stage in the debate. Half of those polled believe that there would less immigration if the UK left the EU.

The article said that the Leave campaign believes it can win for as long as it can keep the headline polls close. They are betting on a low turnout of Labour voters - not unreasonable in our view, given that this referendum is now in part turning into a mid-term protest vote against Cameron. As for the polling methodology, the difference between phone and internet polls seems to be closing. Opinium, the pollster, said an adjustment in the methodology would result in a remain lead of 43-41. Essentially, what these polls tells us time and again, is that the two sides are running close.

The Guardian also has a detailed article on how the Bank of England will keep the financial system funded after a pro-Brexit vote - with an immediate meeting by the monetary and financial policy committees after the vote. One of the measures very likely to be implemented is an emergency liquidity facility, and possibly also swap agreements with the ECB and the Fed.

One observation we have made is that the pro-Remain economic arguments are getting mixed up with a debate about the usefulness of economic models after the financial crisis. Considering the dismal performance of virtually all of them, it is astonishing that any sane person would start a political campaign on the basis of what those models are predicting. In this context we noted this morning an article by several authors lambasting Patrick Minford's pro-Brexit economic analysis, which claims that a unilateral abolition of tariffs and quotas would lead to a fall in import price of 10% and a rise in GDP of 4%. We do not pass judgement on the technical arguments behind the modelling assumption of Minford or of those who criticise him, but what is clear from the debate is that it is model-based - and those models are highly imperfect to say the least.

Our own view of the economic impact of Brexit is that it is likely to be negative in the short term - and neutral in the long run, since in the long-run the economic performance depends on skills, resources, and policies, and there is no reason to assume that those would be intrinsically worse. Since this decision about EU membership is about the long-term future, the economic arguments are irrelevant. We would distinguish, however, arguments about economic security. Those would definitely favour Remain - as would national security in general - which would clinch it for us.

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June 06, 2016

The significance of Gauck

It is often said that the most remarkable act of Pope Benedict XVI is the way he resigned. We express no views on this matter, but we note a parallel with Germany's president, Joachim Gauck, whose five-year term ends in March next year, about six months ahead of the federal elections. The German president has few functions beyond shaking hands. What matters here is that the decision comes at a bad time for the two coalition partners. Their need to select a successor could drive them further apart.

Gauck previously announced that we would declare his intentions in June. Over the weekend Bild reported that the 76-year-old Gauck will not seek a second term. CDU/CSU and SPD have an easy majority in the electoral college (made of the Bundestag and the Bundesrat) but the SPD could also forge an electoral coalition with the Greens and the Left Party. The Left Party wants the SPD to do just that, but the SPD is reluctant so far. Angela Merkel already rejected SPD demands to nominate Frank-Walter Steinmeier as their candidate on the ground that she needs to nominate a candidate from within her own party. The name most frequently mentioned is Nobert Lammert, president of the Bundestag. SPD, Greens, and Left Party have an exact 50% of the electoral committee, but they might be one vote short by February next year, when the AfD is expected to enter another state parliament. Frankfurter Allgemeine noted that Merkel is likely to be in the advantage since the Greens might ultimately support a CDU candidate. In two large states, Baden-Wuerttenberg and Hessen, the Greens govern in a coalition with the CDU, and both states send many delegates to the electoral college. 

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June 06, 2016

Five Star Movement about to take Rome

It was only the first round of the Italian local elections, and in most municipalities it produced no winners. The PD did not do too badly, but it looks very much like Rome will go to the candidate of the Five Star Movement, Virginia Raggi, who got about 37%, according to last night's projections. The Five Star Movement also did well in Turin, where it is also in the run-off, against the mayor Piero Fassino, a former deputy finance minister in the previous PD-led administration, and who was highly critical of the policies of the EU and his own government. In Milan, the race is between the PD and the centre-right, with the PD in a slight lead. 

What the results are telling us is that the Five Star Movement can mount a successful challenge to the PD with a good candidate, and in places - like Rome - where the PD is seen as corrupt or incompetent. It will be harder for them to beat Matteo Renzi in two years. The result will have no immediate impact on Italian national politics in the short term, however.

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  • Rutte plays tough on Ukraine
  • November 21, 2016
  • Merkel IV
  • Erdogan increasingly alienated from the West
  • EU may force a hard Brexit
  • The day after
  • November 02, 2016
  • How not to address the rise in populism
  • German Social Democrats - the defenders of Putin's interests
  • October 18, 2016
  • The self-destruction of Francois Hollande
  • Brexit psychotherapy
  • At least three candidates for the PvdA leadership
  • The unbelievable hypocrisy of Mario Monti
  • October 03, 2016
  • Hard, harder, hardest
  • PSOE cuts its nose to spite its face
  • In defence of Jeremy Corbyn
  • September 19, 2016
  • Unhappy in Bratislava
  • Au nom du peuple
  • Pressure rising towards a hard Brexit
  • September 06, 2016
  • Eliminating the impossible
  • Merkel-Dämmerung
  • August 26, 2016
  • Will the refugee crisis return?
  • Montebourg en avant
  • Moisi on Sarkozy's chances
  • Binary choices
  • August 15, 2016
  • Sarkozy to declare his candidacy
  • Do intra-eurozone current account deficits matter?
  • On the failures of modern macroeconomics
  • July 20, 2016
  • Brexit illusions
  • Ringfencing the refugee deal
  • Electioneering after Nice
  • Saving the world as we know it
  • On inequality in Germany
  • July 11, 2016
  • Towards Brexit outside the EEA
  • On the EU's deteriorating relationship with Russia
  • July 04, 2016
  • Hard women, hard Brexit
  • We'll miss the EU when it's gone
  • June 27, 2016
  • ... 'twere well it were done quickly
  • June 20, 2016
  • Neck and neck once more
  • How to defeat populism
  • June 13, 2016
  • Civil protest against Syriza
  • Protests over labour French labour law continue
  • Spain's politial realignment
  • Duff on Turkey
  • June 10, 2016
  • What after Brexit?
  • The decisive battle of the French left
  • A new era of Italian politics
  • June 08, 2016
  • Getting real on debt relief
  • The re-alignment of the Italian right
  • A critique of Germany's Turkey policy
  • June 07, 2016
  • Neck and neck
  • Germany's new best friends