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October 30, 2017

Italy's electoral reform seems to backfire already

It has been our experience of Italian politics that gerrymandering has never really worked for the party seeking an advantage over the others. The reason is that the system is too dynamic. Italy's latest electoral reform was intended as a stitch-up by the two largest parties, to keep the Five Star Movement at bay. But the latest polls in Corriere della Sera suggest that this strategy may be backfiring. The real loser from this reform, apart from some small parties, is the Partito Democratico itself.

The latest polls has Five Star in the lead with 27.5%, followed by the PD with 25.5%, Forza Italia with 16.1%, and the Lega with 15.2%. Both Forza Italia and the Lega have seen a rise in support at the expense of the PD, which has lost five percentage points since May. 

The distribution of seats in the chamber of deputies suggests that a hung parliament is the most likely outcome. The following chart takes a bit getting used to, but is quite informative. The inner semi-circle gives the total of seats for the left, Five Star and the alliance of the right. 309 seats are needed for a majority. The right is closest to the target. Since the last poll two weeks ago, their projected number of seats has increased by 10. But they are still 60 seats short:

Even a coalition of PD and Forza Italia would be short of a majority since the Lega and the fascist Fratelli d'Italia would be unlikely to join it. It is hard to do the numbers for the grand coalition. One could add the numbers for the PD and the moderate centre right party of foreign minister Angelino Alfano, who is aligned with Matteo Renzi's PD. That would give 162 for the centre left. But the centre-right would split, with Forza Italia accounting for 63 seats plus a share of the 109 seats elected on the basis of the first-past-the-post system. Almost half of them would be Lega MPs, so that would have maybe 60 seats to the total. Add those together, and you are still short of a majority.

One further note: Five Star has 28.8% of the seats in this projection, with a voting share of 27.5%. So if the idea was to reduce Five Star, then this strategy is clearly not working. On the basis of this poll, the most likely outcome of this standoff would be a minority government - presumably of the centre-right/far-right because the left is simply too weak, and too divided, to be able to govern.

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October 30, 2017

Bregretometer hits another peak

We have come up with another metric to measure the senseless tactics of the Remain supporters in the UK. Our Bregretometer is the number of newspaper columns written about how to undo Brexit before 2019. That number goes up and down depending on the degree of desperation, but it seems to be rising with each glitch in the Brexit negotiations. We expect it to surge in 2018 when Remain supporters will launch their final assault but, barring another election in 2018, we see no chance of Brexit reversal and, even if there is an election, the odds would still not favour it. It is our view that the best course for Remainers is not to obstruct Brexit, but to seek a new positive consensus for rejoining the EU afterwards, on a different basis than before, without opt-outs or rebates.

Over the last few days there were two notable Brexit-reversal columns. In his FT column Philip Stevens makes the sensible point that a two-year transition is too fast to undo forty years of membership. We don't think this is impossible, but three years would clearly be better than two. He outlines two solutions. One is an extension of the actual Article 50 process, which would require unanimity in the European Council. That would allow more time for preparations. The other is to abandon Brexit altogether on the grounds that it is simply infeasible. Here is Stephens' conclusion in case the UK parliament cannot agree to support the repeal bill and the Article 50 agreement:

"The assumption has been in that in those circumstances Britain would simply crash out of the union. But would that be possible if parliament had not put in place anything to replace EU laws? Watching the country fall to political crisis, would a responsible prime minister really chose economic anarchy over the dispatch of a short letter to Mr Tusk, asking, with all due humility, if Britain might change its mind?"

The Times columnist Matthew Parris is no longer quite so confident of his earlier prediction that the chance of Brexit happening is very small. But he is not giving up. He argues that, if public opinion stays where it is today, not much will change. But if public opinion - presumably measured by opinion polls - were to shift, what then? 

"What, though, might be the effect on the EU’s negotiating team as the realisation dawns that there are now three parties to these negotiations: the British government, the EU 27 and the British parliament? Imagine (as I believe) that 'Europe' would still prefer us to stay, has not quite despaired of our relenting, and would be ready to let us change our minds. If so, you have to wonder whether the EU may begin to see advantage in making the final draft agreement unpalatable to our parliament. This would be a big problem for Mr Davis and his team."

There is a long history of both sides of the Brexit debate misreading the EU. The EU is simply too process-oriented to risk a strategy like the one advocated by Parris, because it could so easily backfire. It might drive hesitant Remainers into the Brexit camp. The EU started with a few unreasonable and unacceptable demands, but most of these have been dropped. The Article 50 agreement is unlikely to be very offensive - it would stipulate continued budget payments during the transitional period and make a reference to a financial formula to calculate the contingent liabilities upon Brexit. The far more important trade deal will not be subject to a parliamentary vote at that time. If the Commons were to vote against the repeal bill, as well as against the Article 50 agreement, the situation would indeed be dire. But the best strategy for the government would be to seek a confrontation with parliament. Let the date of Brexit approach, and see whether MPs and Lord will keep their nerve. Public opinion might turn against the government. We think it is more likely to turn against MPs. A few months before the referendum, people were confident that the mood in the country strongly favoured Remain. Why do people think they can read the mood now, when they could not read it then?

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