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October 20, 2017

Why is everybody so nice to Mrs May?

By the standards of historic high noon occasions in European diplomacy, Brexit is a bit of a bore. No, there was no breakthrough last night, and yes, there is a real deadline for December for the first round of the Brexit talks. So we are going to have a classic build-up, and possibly another one of those very long EU summits in December. But the mood seems to have changed. The participants at the summit last night explained the mechanism by which they hope to reach that agreement. According to Laura Kuenssberg of the BBC, Theresa May told EU leaders that her Florence speech was not the last word on finances, while Angela Merkel also tried to strike a positive note, saying she had received no indication that the trade talks could not start in December. She also made a positive comment on the progress of the Brexit negotiations so far. This confirmed our story from yesterday that Germany's main concern is now to get on with a smooth Brexit outcome, but without caving in on the substance of the talks. 

We are also optimistic that a deal will be reached. It will still be difficult, as such deals always are. And it will be the first genuine political Brexit test after the referendum.

The BBC's Europe editor Katya Adler reported that EU leaders went out of their way to ensure that May would not go home empty-handed, agreeing on internal talks - to start on Monday - about the transition and trade deal ahead of the December meeting. This will allow the EU not only to agree a deal in December, but to start trade negotiations right away.

The British government, meanwhile, has found a common and much less offensive language about dealing with a no-deal scenario. Brexit secretary David Davis said that the government was preparing for no deal as an insurance option, but does not intend to pursue the option actively, according to the Times.

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October 20, 2017

The haphazard Rutte III agreement

We have reported previously on the European policy section of the Rutte III government agreement. Bas Jacobs has a comment in De Correspondent about the domestic side of the agreement, in particular the fiscal policy. He writes that the budget policy is inconsistent in the sense that a centre-right government that preaches fiscal responsibility will end up increasing the budget deficit by some €10bn, or about 1% of GDP. There will be €1.4bn more spent on education, advertised as "teachers' salaries"; €1.5bn extra for defence; €1.6bn more in social security as a result of expanded child support; €600m on sustainable energy production; and €800m on development cooperation. In addition, taxes will be reduced by €6.4bn, though the lowest rate of VAT will increase from 6% to 9% to offset partially the cuts to personal income and corporate tax. He criticises the tax cuts as a missed opportunity to reform the tax system. He also notes that the commitment to structural reforms is weaker than in Rutte II. 

Jacobs writes that the four parties of the governing coalition strove tirelessly to reduce the public deficit during the crisis years, and are now increasing it when the economy is recovering. So, as elsewhere in Europe, the obsession with "sound" public finances leads to a pro-cyclical government balance. However, despite low unemployment and strong growth, Jacobs suggests that there might still be some slack in the economy. GDP is still about 10% below the pre-crisis trend, and there are 1.3m underemployed people, would like to work more hours. 

All in all, Jacobs cannot escape the impression that the Rutte III government agreement is a haphazard collection of measures that would have turned entirely differently had the coalition negotiations been conducted in a different order or at a different pace. 

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October 20, 2017

Liberalism for the French left

Reinventing a national narrative does not happen overnight. It requires more than just a new vocabulary. Especially when it comes to the deeply engrained values of Liberté, égalité, fraternité.

Emmanuel Macron now looks to change the narrative for one of them. He wants to change the understanding of what equality means. The French are used to see equality in terms money, while at the same time accepting inequality of their status, says Zaki Laidi. Now Macron wants to change this and create equality in terms of chances. Inspired by John Rawls and Amartya Sen, Macron intends to bring these concepts into action. His wealth reform, housing benefits, and the proposal of small class sizes in educational priority zones, are all part of this approach, writes l’Opinion. But what is missing is his discourse about how his policies will bring about more social justice. Rawls and Sen might have conceptualised this, but to take it to the people is another thing. Don’t the people have to understand the intent behind Macron’s approach in order to participate and bring about the social justice he sets out to deliver? According to an Ifop poll earlier this week, about 56% of those polled don’t understand Macron’s policies. There is still a lot of convincing to do.

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