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February 14, 2017

Elites vs underdogs - French edition

If you look at the voters of Emmanuel Macron, you might wonder what his chances are to win against Marine Le Pen. Ifop looked at the profile of those who intend to vote for him. One of the striking statistics was that Macron only gets 14% from workers, the same as Jean-Luc Mélenchon (!). In this class Marine Le Pen reigns with 37% support, while Benoit Hamon does slightly better than the others with 18%. The most telling feature, in our view, is that the more educated people are more likely to vote for Macron and the less educated go for Marine Le Pen:

Education has been one of the dividing lines also in the Brexit vote and the American elections, and we all know what happened there. Add to this that Macron is the urban favourite, but not in the outskirts, the infamous banlieues, and you end with a candidate of the elites against a candidate of the underdogs. And it is not that immigrants living in those banlieus are against Le Pen, as one might expect. Many of them have been there for some time now and the last thing they want is more immigration.

So if Marine Le Pen and Emmanuel Macron end up in the second round, will we see another stand-off between the elite candidate and the underdog star? They effectively stand for two different world views. Le Pen divides the world into globalists and patriots, Macron into progressives and conservatives, notes Journal du Dimanche. In the US, Chris Arnade saw Trump's victory as a result of the social isolation of the uneducated whites. Could this also happen in France?

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February 14, 2017

A rock on the road to Brexit

The Financial Times writes that Spanish diplomatic objections over the status of Gibraltar's airport are currently holding up some European legislation. Looking forward, the dispute over Gibraltar's airport threatens to hold up negotiations on Britain's membership in the European common aviation area, or alternatively a bilateral "open skies" agreement between the UK and the EU. Despite earlier assurances by Spain's foreign minister Alfonso Dastis that Spain "won’t put Gibraltar at the centre of negotiations", we have no doubt that Spain will be willing to exercise its veto rights at key moments in the Art. 50 negotiations, if the EU does not accord Gibraltar a separate status from the UK.

The narrow point of dispute over Gibraltar's airport is that Spain interprets that the 1713 Treaty of Utrecht did not grant the UK sovereignty over the isthmus of Gibraltar, where the airport is built. Spain cannot allow an agreement between the UK and the EU to apply to Gibraltar's arport, as that would recognise the legality of the UK's claim to the airport. Thus Spain will demand that the status of Gibraltar's airport will be negotiated separately from that of the other UK airports.

The broader point of international law is that Gibraltar is not actually part of the United Kingdom. Under British law it is a British overseas territory under the jurisdiction and sovereignty of the UK. Under European law it is a European territory for whose external relations a member state - the UK in this case - is responsible, according to article 355.3 TFEU. And it is recognised by the UN as a non-selfgoverning territory pending decolonisation. When Spain joined the then-EEC in 1986, it did not contest the arrangement standing since the UK's 1973 accession and which governed the application of European law in Gibraltar. However, since 1986 Spain has taken the position that the status of Gibraltar is a bilateral affair between Spain and the UK. As the FT quotes chancellor Philip Hammond (then foreign secretary) in 2014, the UK considers Spanish obstructions "political point-scoring" in its push to regain sovereignty over Gibraltar.

The view from Spain, reflected in this analysis piece by Alejandro del Valle Gálvez for the Elcano think-tank last October, is that Brexit strengthens the hand of Spain in negotiations over Gibraltar, where it had been weakened substantially since Mariano Rajoy's government ended the tripartite dialogue forum set up by the previous administration of José Luis Rodríguez Zapatero. Spain will have two opportunities to exercise its veto over the Brexit negotiations, first when the European Council (at 27) provides negotiating guidelines according to Art. 50.2, and then at the time of ratification of the final agreement by the EU and each of the 28 member states. Before this, the Council (at 27) must adopt the final agreement by qualified majority, but it is felt desirable that this is also done by consensus - at that point Spain will enjoy a not-quite-veto.

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February 14, 2017

A short note on politicised forecasting

There was a time when we dutifully recorded economic forecasts by various institutions, but given their persistently dismal record, we decided that these forecasts actually detract from knowledge. They are also heavily biased politically. The Commission does not want to upset the delicate political balance in Italy, but wants to ensure that the French president is mindful of the deficit targets. Hence, they are relatively cautious on Italy, keeping up the pressure but without threats of a renewed excessive deficit procedure. It is also not surprising that the European Commission has a more negative view of the economic impact of Brexit than the Bank of England. In other words, these figures tell us what we already know. 

The Commission’s forecasts are perhaps most useful in terms of confirming what political fights to expect. The Commission sees Germany’s current account surplus, of 8.7% in 2016, falling only gradually, to 8.3% in 2017 and 8% in 2018. This issue won’t go away. The gradual economic recovery will help consolidate the fiscal position of member states, whose aggregate deficit is forecast to decline from 1.7% to 1.4% this year. The French deficit for 2018 is put at 3.1% - which means that France is on course to miss its much-delayed target of a 3% deficit once again, unless corrective action is taken. The purpose of this forecast is clearly to put the new administration under pressure to undertake another round of fiscal consolidation. The only candidate in the French elections who has publicly supported strict adherence to the 3% target is Emmanuel Macron, the current favourite in the polls - though we wonder what will happen if his conservative fiscal stance becomes a subject of the election campaign.

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  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • September 30, 2019
  • A pyrrhic victory for Kurz
  • Will there really be UK elections?
  • November 19, 2018
  • May’s pushback is kicking in
  • January 08, 2018
  • Getting real on Brexit
  • Macron in China
  • March 01, 2017
  • The threat of Frexit
  • Fear and loathing of a referendum in Spain
  • How to get around Theresa May’s little ECJ issue
  • Solve the problem
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • June 11, 2019
  • Politics and the new sense of urgency
  • Ten little monkeys jumping up and down - down mostly
  • August 28, 2018
  • Urban politics and national crisis - the Irish case
  • How anti-semitism became one of the main issues in British politics
  • November 13, 2017
  • A pro-European list: Wauquiez' nightmare
  • Catalan separatism isn't going away
  • Why oh why does Germany behave the way it does?
  • Why the four freedoms matter
  • February 02, 2017
  • Will it come to the use of force in Catalonia?
  • The day Brexit became irreversible
  • Can Trump and May succeed?
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • February 13, 2019
  • What to make of the man in the pub - and other tales
  • Macron loses more early advisers - or cuts them loose
  • June 01, 2018
  • Will France and Germany stick together in their response to US trade tariffs?
  • From a eurozone budget to a slush fund
  • September 18, 2017
  • Why Germany cannot lead Europe, let alone the free world
  • Will Macron help to build up Mélenchon?
  • Boris' Coup
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • May 09, 2019
  • The EU's impossible dilemma
  • The horsetrading starts in Sibiu
  • May to bring withdrawal bill to Commons week after next
  • September 27, 2018
  • Two ways out of the Brexit impasse
  • February 16, 2018
  • How big will the euro budget be?
  • July 10, 2017
  • EU in self-destruction mode
  • The EU's fault lines
  • Fake News and Fake views
  • November 30, 2016
  • Is Russia behind a massive cyber attack in Germany?
  • Will Fillon move to the centre?
  • The Dutch left field is getting crowded
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • October 18, 2019
  • The horrifying implications of Merkel’s 5G decision
  • April 17, 2019
  • Why it is far from clear that the grand coalition will survive the year
  • Macron's chance and challenge
  • Eurozone firms' surprising response to sagging profits
  • The result of Spain's elections, a riddle wrapped in mystery
  • The MMT debate is coming to Europe - and Germany
  • Greek parliament seeks German war reparations
  • October 15, 2018
  • Black Brexit smoke
  • Bettel can relax and stay in office
  • Solving the crime vs solving the problem
  • April 16, 2018
  • Italy's and Germany's pained response to the Syria attacks
  • On the end of the eurozone's economic honeymoon
  • Why Bulgaria should stay out of the euro
  • Where shall we meet after Brexit?
  • October 16, 2017
  • What‘s the deep meaning of the elections in Lower Saxony?
  • Can Brexit be revoked?
  • Macron's grand narrative
  • April 19, 2017
  • Shadows of money
  • Breppe Grillo vs Eurointelligence
  • October 20, 2016
  • No games please, we are Europeans
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • July 16, 2019
  • What next, after EU sanctions Turkey?
  • What to make of Johnson’s four-point Brexit plan
  • Galileo fails, and nobody notices
  • March 04, 2019
  • Macron's two-month sprint
  • May's numbers are not there yet
  • Greening QE
  • On the "hope" of a rate raise
  • October 22, 2018
  • A week of intense political tension in the UK
  • Poland's local elections reveal deeply-split country
  • June 11, 2018
  • The end of the G7 - good riddance
  • Macron needs allies for his European agenda
  • Who is going to be the next director-general of the Italian treasury?
  • January 29, 2018
  • Where is the opposition in France?
  • Scenarios and risks for Syriza over Macedonia
  • September 21, 2017
  • Time to get serious about Brexit
  • Would the FDP claim the job of finance minister?
  • The return of the ultra-right to German politics
  • May 15, 2017
  • SPD and CDU disagree on how to respond to Macron
  • Was Rajoy blackmailed?
  • The rise of the re-leavers
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • August 30, 2016
  • Brexit facts on the ground
  • Burkinis and Republican primaries
  • The SPD and TTIP
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • September 17, 2019
  • Beware of the diplomacy of humiliation
  • Germany’s climate hypocrisy
  • August 05, 2019
  • No deal first, elections later
  • Free movement of labour? Not for politicians
  • Europe already lost the digital battle
  • June 24, 2019
  • Economic reform has torn up the SPD - climate policy does the same for the CDU/CSU
  • Not intruding, not really
  • May 13, 2019
  • Brexit Party has already changed UK politics
  • Orbán visits Trump, after a very long wait
  • Le Pen's appeal to the PiS likely to fall on deaf ears
  • April 02, 2019
  • Meaningless II
  • What will come out of the grand débat?
  • February 22, 2019
  • The maths of a Brexit deal
  • Does public protest crowd out of climate change?
  • January 16, 2019
  • And now think about this standoff from the perspective of the EU
  • What can the French learn from Brexit?
  • December 10, 2018
  • ECJ says UK free to revoke Article 50, even inside extension period
  • A turning point in Macron's presidency
  • China has added Portugal to the list of its key EU partners
  • Belgium's coalition implodes over Marrakesh pact
  • November 05, 2018
  • Macron trails behind Le Pen in European elections poll
  • How the CDU will organise leadership campaign
  • October 01, 2018
  • After the referendum, more turmoil in Macedonia
  • What will happen if the UK parliament votes No?
  • Barnier's no-thanks works much better than a yes-please
  • August 28, 2018
  • Urban politics and national crisis - the Irish case
  • How anti-semitism became one of the main issues in British politics
  • July 27, 2018
  • Be careful what you wish for - trade edition
  • A test of Pedro Sánchez' majority
  • June 25, 2018
  • Trump's car tariff to come early
  • On the lack of a sharp focus in the eurozone debate
  • May 23, 2018
  • Mattarella’s limited options
  • April 23, 2018
  • More bad news for the SPD
  • Will Theresa May accept a customs union? The Times says yes. We think so too.
  • A comeback for Marine Le Pen?
  • March 26, 2018
  • On the run no more
  • Terrorist attack will challenge Macron
  • A double-whammy of geopolitical and financial uncertainty
  • February 26, 2018
  • Angela Merkel's cabinet
  • January 30, 2018
  • Will Puigdemont be Catalan premier today?
  • Some thoughts about the German car industry
  • A short note on Italian coalition maths
  • January 05, 2018
  • Catalonia's government by Skype
  • The case for EEA membership
  • December 08, 2017
  • Schulz' Europe
  • November 15, 2017
  • A Christmas bonus for poor Greeks
  • Dim prospects of negotiated de-escalation on Catalonia
  • Macron's favourite to succeed Juncker - first round
  • On sovereignty
  • Gli Azzurri
  • October 24, 2017
  • Is Kaczynski tired of ruling behind the scenes?
  • An era of movements instead of parties?
  • On the decline of the traditional parties
  • October 02, 2017
  • Catalonia recalls EU and eurozone instability
  • French trade unions increase pressure over labour reforms
  • Watch out for a political accident in the UK
  • Municipal elections boost Portugal's Socialists
  • September 11, 2017
  • Turkey issues travel warning for visitors to Germany
  • How nasty is the AfD?
  • August 23, 2017
  • Is Macron neo-protectionistic?
  • No, it is not easy to get rid of the stability pact
  • August 04, 2017
  • What the diesel saga tells us about the EU
  • July 17, 2017
  • What Tony Blair's Brexit confusion tells us
  • Schulz advocates compulsory investments
  • Italy’s government has effectively lost its majority
  • June 30, 2017
  • Recurring Brexit myths
  • On EU citizen rights
  • On Brexodus
  • June 14, 2017
  • Minority governments can be stronger and more stable than you think
  • The anti-Corbyn
  • Watch out for Berlusconi
  • May 30, 2017
  • Beer tent politics - Merkel edition
  • Brexit arrives in UK elections
  • Rajoy clears budget hurdle
  • May 15, 2017
  • SPD and CDU disagree on how to respond to Macron
  • Was Rajoy blackmailed?
  • The rise of the re-leavers
  • May 02, 2017
  • An accident waiting to happen
  • Matteo Renzi wins PD primaries
  • So much for the Schulz effect
  • April 21, 2017
  • Are the elections the result of Bregret speculation?
  • April 10, 2017
  • Nein, nein, nein, und nein
  • Sounds like a bad Brexit story, but ain’t
  • On how not to exit the euro
  • March 29, 2017
  • B-Day
  • Wargaming Catalan independence
  • Macron's strategy for the legislative elections
  • March 21, 2017
  • Is Merkel going to say something?
  • On how to think about Brexit and defence
  • March 13, 2017
  • Poland and the future of the EU
  • Polls show 40% support for Costa's Socialists
  • Council of Europe questions Spanish constitutional court reform
  • March 05, 2017
  • Poland vs Tusk
  • Juppé - a recovered candidate?
  • Will Italy leave the euro?
  • February 28, 2017
  • Is Hamon losing the right wing of his party?
  • Something we just don’t understand
  • Solve the problem
  • February 24, 2017
  • Schulz effect stabilises
  • Wilders security breach becomes campaign issue
  • Kenny wants Ireland clause in Brexit deal
  • On why Europe should not overreact to Trump
  • February 20, 2017
  • SPD ahead of CDU/CSU
  • Fillon bounces back
  • The Brexit timetable
  • February 17, 2017
  • Watch out for instability of the Balkans
  • The economic consequences of Trump for Europe
  • On muddled thinking in Ireland
  • February 15, 2017
  • Fillon under fire
  • More headaches for Rutte
  • Who are the bigots now?