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July 26, 2017

Has Schulz blown it?

We think that the analysis by the German national broadcaster Tagesschau on the current political scene is spot-on. Unless a miracle happens after the holiday season, the SPD has blown it. ARD/Deutschlandtrend’s latest poll has the CDU at 39% against the SPD at 23%, which is more-or-less in line with other recent polls. The FDP gets 9%. Together, CDU/CSU and FDP would have one percentage point less than the combined opposition, but that gap is obviously within the error margin of the polls. The best result the SPD can hope for now is to prevent such a centre-right coalition from emerging. The CDU/CSU and FDP will always be able to form a coalition with the Greens as a third party, but our expectation is that the SPD would rather agree to join another grand coalition. 

The article suggests that Schulz has made irrecoverable mistakes - no agenda in the beginning; an implausible attack on Angela Merkel, whom he accused of being anti-democratic; and lack of credibility in his criticism of her response to the refugee crisis, since everybody knows that the SPD supported the policy at the time. His last-minute change of election campaign manager shows a degree of panic in the party’s high command. 

There are not many opportunities left for the SPD to change course. The holiday season has now started, with Angela Merkel and other politicians descending on Bayreuth for the Wagner festival. Once they emerge from the holidays, there will be a little more than a month of campaigning left.

In our view, the most the SPD can now achieve is to prevent a CDU/CSU coalition, though this would also be a poisoned chalice because another grand coalition might end up destroying the party. If a grand coalition is the only feasible two-party coalition option, it will happen simply because the lure of power and government limousines is irresistible to SPD leaders, even if the long-term consequence is the destruction of their party.

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July 26, 2017

Housing benefits cuts expose Macron's weakness

Emmanuel Macron is to pay dearly for this reform to cut housing benefits (APL) by €5 per month. It gives a political platform to those poorer citizens who will be affected. There are already voices out there accusing Macron of not knowing what poverty is. Not the kind of PR you want when you are negotiating with trade unions about labour law reform. The handling of this crisis may well expose the French government as arrogant and out-of-touch.

It is a stupid measure, concludes Jean Marc Vittori. It only raises €100m out of the required €18bn in savings. It is deeply unjust, as it affects poor households. And it could well compromise other more serious reform efforts. Yet, housing policies cost the state €40bn yearly. Relative to GDP this is twice as much as the European average and four times the German level. Yet, houses are not better than elsewhere. And studies showed that, when the housing support was extended to students, it benefited the landlords who just raised the rents. The result was rising house prices. The minister Jacques Mézard promised a deeper reform in the autumn. There is clearly some more work to be done.

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  • 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 20, 2018
  • Why preparations for no-deal Brexit are a positive development
  • On confirmation bias in the Brexit commentary
  • June 25, 2018
  • Trump's car tariff to come early
  • On the lack of a sharp focus in the eurozone debate
  • June 01, 2018
  • Will France and Germany stick together in their response to US trade tariffs?
  • From a eurozone budget to a slush fund
  • May 09, 2018
  • A moment of truth in the Brexit talks
  • A leap of faith, Mr Kierkegaard?
  • 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?
  • March 26, 2018
  • On the run no more
  • Terrorist attack will challenge Macron
  • A double-whammy of geopolitical and financial uncertainty
  • March 05, 2018
  • One rock, two vetos, three governments
  • Rutte weighs in
  • February 12, 2018
  • What the euro debate is really about
  • How Brexit can still falter
  • January 22, 2018
  • Carles Puigdemont's flying circus
  • Macedonia and the insurrection of Greek patriotism
  • On the real hurdles for Brexit revocation
  • And the satellites, too
  • January 05, 2018
  • Catalonia's government by Skype
  • The case for EEA membership
  • December 20, 2017
  • Down with the gown
  • How to overcome the political gridlock in Italy
  • Varoufakis is suing the ECB
  • 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 20, 2017
  • Showdown over Northern Ireland
  • Castaner and his list confirmed
  • Gennimata to lead the new left alliance
  • Brexit‘s ultimate irony
  • November 06, 2017
  • Pressures on EU rise over Catalonia
  • German pre-coalition talks hit glitch
  • If you thought UK politics couldn‘t get worse...
  • 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 13, 2017
  • Why Austria’s vote matters
  • What a Paris diesel ban would mean for Europe's car industry
  • A Dutch referendum on the Dutch referendum?
  • 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 22, 2017
  • The last German polls
  • September 13, 2017
  • Why the Turkey negotiations will continue
  • September 05, 2017
  • On the Turkish question
  • Macron's unemployment insurance reform, next?
  • Labour to vote against the Repeal Bill
  • August 29, 2017
  • The deep significance of Labour's Brexit U-turn
  • The day after the SPD loses
  • August 21, 2017
  • Soft, getting softer
  • Tsipras' chances of a boost
  • On the fallacy of a middle-ground option for the eurozone
  • August 03, 2017
  • Commons to vote whether to keep UK in universe
  • Syriza uses eduction bill to reconnect with grassroots
  • July 31, 2017
  • Russia sanctions bill becomes US law
  • Spain's Guardia Civil in the eye of the Catalan storm
  • A grand bargain between France and Germany
  • July 28, 2017
  • German government bans Porsche Cayenne
  • More troubles for the AfD
  • Of course there will be a soft transitional period for the UK
  • July 27, 2017
  • Löfven's move
  • The nearing end of petrol and diesel engines
  • Why a second referendum in the UK won’t happen, and why it would be wrong