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June 20, 2017

How to soften Brexit?

The Brexit talks started yesterday with a focus on procedure. The UK has unsurprisingly dropped its irrational demand for parallel trade negotiations, and now accepts the EU’s timetable for the sequencing of the talks. The two sides set up three working groups: on the financial settlement, on citizen’s rights, and on other legal issues. The UK will present an offer on citizens’ rights next week. The two sides will negotiate for one week each month. Northern Ireland will be dealt with directly by the deputy negotiators.

This was not the confrontational start of the negotiations that some had expected, and there now seems to be on the UK side a desire for talks to end successfully. There is a still a lot of ill-informed debate about soft-vs-hard Brexit, which ignores the fact that the EU has accepted Theresa May’s negotiating mandate seeking a formal exit from both the customs union and the single market. We think that the probability of a change in the negotiating mandate is next to zero. What we think possible is an agreement on a sufficiently long transitional period, with the current arrangements in place, during which the EU and the UK would negotiate a closer partnership deal including a comprehensive FTA.

We note two comments this morning. George Soros notes that economic reality is beginning to catch up with false hopes. The moment of truth for the UK economy is fast approaching. UK households will have to adjust their spending downwards, and many households will discover that they have incurred too much debt, and will need to deleverage. This economic reality will inform the future of the Brexit debate. 

George Eaton goes into the politics, and notes that Labour’s commitment to ending free movement of labour should not be overinterpreted. They are prioritising the economy, not immigration. Free movement may end officially, and be replaced with something nearly identical. He notes that there is an overwhelming majority of opinion in the UK in favour of Brexit, but only a minority is in favour of a hard Brexit. This political reality will inform the UK’s negotiating position.

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June 20, 2017

The deep roots of Brexit: Thatcher and the Germans

The FT offers a brilliant account of the declassified UK government papers detailing Thatcher’s attitudes to German unification. If you want to look for the deep origins of Brexit, the events of 1990 play an important part in the process of mutual alienation. 

There are two interesting aspects to this account. The first regards a phone call between Thatcher and former president George Bush, who was aghast at Thatcher’s suggestion to use the Soviet Union as a counterweight to Germany. Charles Powell, her private secretary, wrote a memo to her that Bush had failed to understand the subtlety of her position, and it was necessary for her to talk to the president in simple sentences, with as much repetition as possible. 

The second aspect relates to the famous Checkers’ seminar in March 1990, during which Thatcher met with some UK historians to discuss the German national character. There have been several accounts of this meeting, but Powell’s description is particularly brutal. The Germans were obsessed with themselves, he wrote, had an inclination to self-pity, and a longing to be liked. Powell lists the German traits in alphabetical order:

“angst, aggressiveness, assertiveness, bullying, egotism, inferiority complex, sentimentality... The overall message was unmistakable: we should be nice to the Germans. But even the optimists had some unease, not for the present and the immediate future, but for what might lie further down the road than we can yet see.”

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  • Not just Brexit makes 2019 a year of EU uncertainty
  • Sentiment is fickle, especially about sentiment
  • Father Christmas - French edition
  • King suspends Michel's resignation
  • EP has objections to the withdrawal treaty
  • Let's break the law
  • November 19, 2018
  • May’s pushback is kicking in
  • October 17, 2018
  • Not a solution to the Brexit impasse, but a first step
  • September 17, 2018
  • About the new partnership between Russia and China
  • EU ponders Irish backstop protocol to help May
  • August 20, 2018
  • ... and a subtle shift in EU policies towards both Russia and Turkey
  • Nothing to celebrate about the end of the bailout programme
  • Support for Brexit holding up
  • July 16, 2018
  • How to think about the three Brexit options
  • How to respond to Trump
  • June 18, 2018
  • Some thoughts on the future of Europe
  • The end of Spanish income moderation?
  • May 21, 2018
  • Another snap election in the UK? Tories are preparing
  • Merkel and Putin - the beginning of a beautiful friendship?
  • April 27, 2018
  • The return of Spain's government by parliament?
  • Towards elections in Ireland?
  • From Washington to the banlieue
  • The case for a time-limited customs union
  • April 03, 2018
  • Is the time for Brexit revocation running out?
  • March 09, 2018
  • The Franco-German axis and its opponents
  • Auf Wiedersehen, Sigmar Gabriel!
  • February 15, 2018
  • How will the EU finance itself after Brexit?
  • On the customs union
  • January 25, 2018
  • About political leadership in the 20th century
  • Progress in name dispute talks and new opposition at home
  • About 40% probabilities
  • January 05, 2018
  • Catalonia's government by Skype
  • The case for EEA membership
  • December 11, 2017
  • A new era for the French right
  • Growing scepticism of a grand coalition
  • November 24, 2017
  • Irish snap elections in January?
  • Alternatives to single market membership
  • Are the Irish bluffing?
  • November 08, 2017
  • Spain's attorney general personally sought pre-emptive prison for Catalan rebels
  • Spain's finance ministry to control Madrid city spending
  • National identity with a new twist
  • October 23, 2017
  • Macron's plans for the European Parliament
  • First phase of Brexit negotiations in final stretch
  • Why the left hates Europe
  • October 09, 2017
  • UK is starting to prepare for a no-deal Brexit
  • Why Germany will resist meaningful eurozone reform
  • September 25, 2017
  • Where does this leave eurozone governance reform?
  • Is Mélenchon losing his momentum?
  • Lost in Florence
  • September 13, 2017
  • Why the Turkey negotiations will continue
  • September 01, 2017
  • Rutte deflates Dutch labour party like a hot air balloon
  • August 21, 2017
  • Soft, getting softer
  • Tsipras' chances of a boost
  • On the fallacy of a middle-ground option for the eurozone
  • August 02, 2017
  • On the importance of a Brexit transition
  • To kill a referendum, starve it
  • How to spot a moron?
  • July 25, 2017
  • The impact of Duda's veto
  • How to undo Brexit
  • Front National: Frexit or not?
  • July 17, 2017
  • What Tony Blair's Brexit confusion tells us
  • Schulz advocates compulsory investments
  • Italy’s government has effectively lost its majority
  • July 11, 2017
  • The political fallout of the G20 in Germany
  • July 05, 2017
  • Europe’s next migration crisis
  • Philippe: French need to kick spending addiction
  • June 30, 2017
  • Recurring Brexit myths
  • On EU citizen rights
  • On Brexodus
  • June 26, 2017
  • Brexit - the central case and the tail-risk
  • The German fear of Macron
  • June 23, 2017
  • The offer, and what it says about the state of Brexit
  • Meet Germany’s next finance minister
  • When Greek drama meets French drama
  • June 21, 2017
  • Why has the SPD deflated?
  • Berlusconi’s strategy
  • June 20, 2017
  • How to soften Brexit?
  • The deep roots of Brexit: Thatcher and the Germans