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October 06, 2017

Catalan parliament session suspended

Catalonia produced yesterday two news items each of which would by itself top the front pages on a normal day: the Spanish Constitutional Court issued an injunction to prevent the Catalan regional parliament from meeting next Monday, and two major Catalan banks decided to move their HQ out of Catalonia. It's hard to tell which one will have the more far-reaching and lasting consequences, but we choose to tackle the political story first because the bank move was expected to some extent.

We reported yesterday that the board of the Catalan parliament had met to convene a plenary session next Monday where the regional premier Carles Puigdemont would assess the results of last Sunday's independence vote, in accordance with the referendum law that the Spanish Constitutional court had voided last month. This law mandated that, within two days of the official proclamation of an affirmative result in the independence referendum, the Catalan parliament must meet to declare independence. The Catalan socialist party PSC, the sister party of PSOE, reacted to this by appealing to the Constitutional Court. The PSC asked the court to suspend Monday's plenary session with Puigdemont, as well as any related future action. The party argued this was necessary to protect the procedural rights of MPs, and also pointed out that the board was intentionally ignoring the earlier injunction by the constitutional court voiding the referendum law. Yesterday, the court obliged and suspended Monday's plenary session.

The Constitutional Court argues in its decision that there is exceptional urgency in this case, as allowing the plenary session to go ahead could result in a damage impossible or too difficult to repair, in reference to a possible unilateral declaration of independence. 

The parliamentary group of Podemos' Catalan sister party, CSQP, reacted to the court's injunction by asking the board to convene another plenary session for Monday with the same agenda - for the regional premier to discuss last Sunday's referendum - but with a different legal basis. The separatist groups JxS and CUP had asked for Puigdemont to appear on the basis of an article in the voided referendum law. CSQP is using an article of the rules of procedure of the Catalan Parliament, allowing any parliamentary group to request the appearance of the regional premier. 

Meanwhile, the three major print newspapers in Catalonia have come out against a unilateral declaration of independence. There are indications that a large part of Puigdemont's party PdeCat is getting cold feet about its consequences. But the more radical part of the separatist movement wants to go ahead with a declaration, and it is unclear what the Catalan regional premier himself will decide to do. A meeting of the PDeCat executive was inconclusive, and leaves the final decision to Puigdemont according to El Periódico.

To top it all up, the Major of the Catalan regional police, Josep Lluis Trapero, is being investigated for sedition by Spain's national court. He has been summoned by a judge to declare today on the events of last Sunday, where the regional police apparently stood down and left it to the Spanish national police and Guardia Civil to carry out a court order to prevent the vote from taking place. The result was the police violence we saw on Sunday, which largely failed to prevent the vote. Along with Trapero, the judge has also cited the presidents of the grass-roots organisations Catalan National Assembly (ANC) and Ómnium Cultural. The definition of "sedition" in Spain's criminal code includes "rising up publicly and tumultuously to prevent outside legal ways the fulfilment of judicial resolutions".

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October 06, 2017

Can Jamaica fail? (not the country)

Claus Offe offers a dark and brilliant analysis of German politics, and shares much of our own concern about developments in German and European politics. What interests us in particular was his contrarian view on the likelihood of a Jamaica-coalition, which virtually every pundit now takes as a given. The reason he is so pessimistic is that the Greens will not be able to support it. It is hard to imagine that the Green Party's membership would accept a coalition agreement that will see very few of the Green Party's policy implemented. Since the Social Democrats have stated clearly that they will go into opposition, this leaves as the only possibility a minority government of CDU/CSU and FDP, which would be without precedent. But it would be attempted because new elections are not going to bring any relief, and may make it even harder to form a government. Complicating the whole process are the leadership crises in all of the large parties - CDU, CSU, and SPD. This is Offe's dramatic outlook:

"We see an ongoing flattening of the bell curve of the parties’ electoral strength. We see a rather dramatic loss of center parties, a moderate growth of the leftist parties, and a big growth of the new rightist party. 'Catch-all' parties catch less and less."

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October 06, 2017

Portugal to give tax relief to the lower middle class

The Portuguese government gave into demands by the Left Bloc and the Communists to lower personal income tax not only for lower-income but also middle-income earners, Jornal de Negocios reports. It is still unclear what form the tax relief will take and when it will come into force, whether in 2018 or later in 2019. What is certain is that 1.16m taxpayers with taxable incomes ranging from €7,000 to €20,000 will get tax relief next year. Under current plans, relief is now also in the cards for taxpayers with a taxable income of between €20,000 and €40,000. Under discussion is that both tax brackets could either have a staggered tax relief spread over two years, or full relief for the lower bracket in 2018 followed by relief for the middle bracket in 2019. Depending on the measures, cost estimates vary between €80,000 and €180,000.

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October 06, 2017

Stagnant wages and Central European populism

Sebastian Dullien observes that wages in the Czech Republic have stopped converging to German levels since 2007, and are now stuck at a large and permanent discount. People in the Czech Republic blame this on foreign investors, mainly French and German, as half of the manufacturing sector and almost the entire financial sector are foreign-owned. Workers at Skoda, owned by VW, earn a third of the wages of VW workers in Germany, even though their productivity is the same. Dullien notes that the perception in the Czech Republic is that the value thus extracted is distributed between German shareholders and workers. There is a sense that Germany in particular is behaving like a colonial power. 

Dullien's own conclusion is that this may be an exaggeration, but it would explain the degree of dissatisfaction with EU membership in the Czech Republic. It could also suggest that Berlin and Brussels may have neglected the problem of stagnating wages in central and eastern Europe, which may have contributed to the rise in populism there.

The Czech Republic is gearing up to a general election in two weeks' time, and Andrej Babis - a eurosceptic populist tycoon notorious for his conflicts of interest and under investigation for illegally receiving EU farm subsidies - is leading the polls.

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