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April 20, 2017

Don’t bet on Trump turning globalist

We recently argued that it was too early to pass judgement on whether Donald Trump would transform into a classic Republican president, or whether his radical agenda would resurface. Greg Ip takes the same position, warning that it is premature to think of Trump as having gone globalist after his attack on Syria. That is not so. On economic issues, he argues, Trump will stick to his radical agenda. This is why we are taking an interest in this story, which would otherwise fall outside our reservation. Ip notes that, on immigration and trade, the "Republican working-class" is closer to Trump than to other Republican leaders. Ip says it will be Trump’s strategy to extract concessions from trading partners rather than to go for all-out trade wars. And Trump will not be averse to using unilateral action, in defiance of WTO rules. 

FAZ, meanwhile, reports that Berlin is busy preparing itself against trade measures from Washington. The government has composed a paper on the German current account surplus, for discussions during the spring meetings of the IMF and the World Bank this week. The paper makes three points. The first is that the bilateral US-German trade deficit should not matter. The insinuation is that the trade surplus is due entirely to the policies of the ECB, which is to keep interest rates artificially low. Secondly, the mirror image of the current account surplus is the capital account deficit. Germany has invested €63bn into the US last year alone. And finally, the German government has estimated that the current account surplus will sink from 8.6% in 2016 to about 7% next year.

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April 20, 2017

A note on UK election polls

The one firm lesson from last year’s electoral shocks is not that extremist positions always prevail. The lesson is that one should not rely too much on opinion polls, but take error margins very seriously. The French polls do not tell us that Marine Le Pen or Emmanuel Macron are ahead of the other candidates. They are telling us that the candidates are neck and neck. 

This is not the case in the UK. The Tories have a lead of some 20pp over Labour. And, since Labour is also committed to Brexit, it would now take an alliance of the LibDems plus Labour and Tory dissenters to forge an anti-Brexit majority. This is not going to happen. As Labour will enter the elections with eurosceptic Jeremy Corbyn as its leader, the one certain conclusion we can draw already is that the fast-shrinking window for Brexit reversal will close on June 8 under any conceivable outcome. The question is whether it will be Theresa May or Jeremy Corbyn to lead the UK out of the EU.

We noted a comment by George Eaton in the New Statesman, who says the Tories are fearful that the landslide they expect may not happen because they might find it hard to energise their voters. Nobody in the country believes that Corbyn will ever become prime minister. Eaton quotes one Tory MP as predicting that the majority will be much less than 100. Labour will run a highly localised campaign, allowing MPs to deviate from Corbyn's line, and the Tories fear this might increase the Labour vote in some constituencies. In 2015 the Tories rallied their supporters, who wanted to prevent Ed Milliband from becoming prime minister and to stop a Labour alliance with the Scottish National Party. Since nobody now believes that Corbyn stands a chance, and since Corbyn has now explicitly ruled out a coalition with the SNP, there is not much to attack him with.

The journalist and pollster Peter Kellner cites historic evidence of big shifts during election campaigns. It is fair to expect an increased majority for the Tories, given where the polls are now. But politics has become much less predictable everywhere in the world. This is not necessarily good news for Labour. Kellner recalls the 1983 election, in which Labour started with support of 34%, but ended up with 28%. Labour is at 24% now. If they fall under 20%, the party might face annihilation at the election due to the first-past-the-post system. A shift in the opposite direction would produce a much narrower Tory victory.

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  • 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
  • August 27, 2019
  • Remain’s narrowing pathway
  • Macron's diplomatic masterstroke
  • July 09, 2019
  • What the UK polls are telling us - and what not
  • May 31, 2019
  • Salvini’s frightening strength
  • The significance of Corbyn’s latest flipflop on the referendum
  • April 24, 2019
  • May's final and biggest gamble
  • Will the EP be Brexit's great parliamentary beneficiary?
  • Can Loiseau fight the far right given her past?
  • March 18, 2019
  • May's deal still on the table. Don't rule it out.
  • EPP decision on Fidesz still open
  • On the defeat of liberalism
  • February 08, 2019
  • Macron turns stand-off with Italy into a game changer
  • Is there a strategic intent behind Macron's decision?
  • January 04, 2019
  • Will the AfD become the Dexit party?
  • Romania's corruption problem in the spotlight of its EU presidency
  • November 28, 2018
  • Short postscript on post-first-vote scenarios
  • Listen to the music, but watch the procedure
  • Macron's underwhelming energy speech
  • October 26, 2018
  • Towards Fine Gael II minority government
  • EP votes for Saudi arms embargo, but who cares?
  • It's not easy being green - French edition
  • September 25, 2018
  • Be careful what you wish for - second referendum edition
  • August 23, 2018
  • Chancellor says No to Maas' one and only substantive idea
  • French households yet to see reduction in fiscal burden
  • July 25, 2018
  • Future of euro debate: can the ECB do the heavy lifting?
  • June 26, 2018
  • Could the Irish border issue trigger a no-deal Brexit?
  • Is Harley-Davidson's decision really a victory for the EU?
  • May 30, 2018
  • Italian pro-Europeans repeat UK Remainers' error
  • Commission shakes up structural funds
  • Democracy lessons from the Irish referendum
  • May 04, 2018
  • On the madness of Germany's investment cuts
  • Has Macron given up on eurozone reform?
  • April 09, 2018
  • Orbán gets his supermajority
  • Riding the wave of resistance
  • The EU’s self-defeating strategy
  • March 15, 2018
  • Miro Cerar resigns over railway
  • Taking on trade unions over the rail reform
  • How strong is the EU's solidarity with the UK really?
  • February 19, 2018
  • SPD divided over grand coalition
  • Wauquiez - the French Trump?
  • Why Brexit will be extremely hard to reverse
  • January 26, 2018
  • Will the prison strike turn the fate for Macron?
  • Destroying the constitution in order to save it
  • Will populism wane with the global recovery?
  • Issing on the coalition agreement
  • January 05, 2018
  • Catalonia's government by Skype
  • The case for EEA membership
  • December 04, 2017
  • Can Brexit still be stopped?
  • Could Poland open up the Posted Workers Directive again?
  • Has the Bank of England solved the productivity puzzle?
  • 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
  • October 23, 2017
  • Macron's plans for the European Parliament
  • First phase of Brexit negotiations in final stretch
  • Why the left hates Europe
  • October 06, 2017
  • Catalan parliament session suspended
  • Can Jamaica fail? (not the country)
  • Portugal to give tax relief to the lower middle class
  • Stagnant wages and Central European populism
  • September 20, 2017
  • AfD on the rise
  • Is this the end of the FN as we know it?
  • Refugees overflowing Lesvos lead to call for action
  • September 05, 2017
  • On the Turkish question
  • Macron's unemployment insurance reform, next?
  • Labour to vote against the Repeal Bill
  • August 21, 2017
  • Soft, getting softer
  • Tsipras' chances of a boost
  • On the fallacy of a middle-ground option for the eurozone
  • July 25, 2017
  • The impact of Duda's veto
  • How to undo Brexit
  • Front National: Frexit or not?
  • July 12, 2017
  • And now for the real Brexit talks
  • June 30, 2017
  • Recurring Brexit myths
  • On EU citizen rights
  • On Brexodus
  • June 19, 2017
  • SPD to focus on inequality
  • On radical uncertainty
  • June 08, 2017
  • Day 0
  • Macron and his overly enthusiastic minions
  • May 30, 2017
  • Beer tent politics - Merkel edition
  • Brexit arrives in UK elections
  • Rajoy clears budget hurdle
  • May 22, 2017
  • Catalonia's independence blueprint
  • Commission wants completion of eurozone by 2025
  • The case for more honesty about the abolition of cash
  • The case against an Italian euro exit
  • May 15, 2017
  • SPD and CDU disagree on how to respond to Macron
  • Was Rajoy blackmailed?
  • The rise of the re-leavers
  • May 08, 2017
  • A message of hope
  • Barnier's not so easily agreed Brexit principles
  • The rebirth of the paranoid conspiracy theory
  • May 02, 2017
  • An accident waiting to happen
  • Matteo Renzi wins PD primaries
  • So much for the Schulz effect
  • April 26, 2017
  • The realities of Brexit - residency rights edition
  • How Franco-German economic imbalances manifest
  • Pasok - the now classic Socialist dilemma
  • April 23, 2017
  • The demise of the AfD has accelerated dramatically
  • On how France will need to confront Germany
  • April 21, 2017
  • Are the elections the result of Bregret speculation?