We use cookies to help improve and maintain our site. More information.
close

November 28, 2018

Short postscript on post-first-vote scenarios

In yesterday’s briefing we gave a series of possible Brexit scenarios. We would like to highlight one of these today, and add a new one following a discussion we had yesterday. The scenario we included, and which seemes to be gaining ground, was the Norway option. Nick Boles, a Conservative MP, suggested a pragmatic compromise to get a Brexit deal passed: accept the withdrawal agreement with no changes, but change the political declaration towards what he calls a Norway-Plus option - the combined Efta/EEA package plus co-operation in specific ares such as foreign policy. Interestingly, this option has the support of some eurosceptics, the DUP, and many Labour MPs. For the DUP, this option would remove the main stumbling block of differential treatment for Northern Ireland and the UK mainland. Scottish Tories favour it as it removes any advantages Northern Ireland might gain over Scotland. And some English Tories, including cabinet ministers, favour it because it reduces the probability of the UK remaining in the purgatory of an all-UK customs union post-Brexit. It does, however, remove the possibility of an independent immigration policy. 

We understand the position of the DUP and the Scottish Tories, but we find that Theresa May’s much discredited deal is not nearly as bad as the press it is getting. It ticks a number of boxes that the EEA/Efta arrangement does not. But we, too, would acknowledge that ,if May’s deal is voted down on December 11, then this is what might emerge as a good second-best alternative. It might stand a better chance of gaining support from a majority of MPs, including a good number of Labour MPs. We noted, for example, Stephen Kinnock tweeting heavily in favour.

On the second referendum, our main scenario was an election followed by a new government and a Commons majority in favour. We would like to add another possible second referendum scenario that could happen without an election. After the December 11 vote, the House votes in favour of a motion for a second referendum. Motion passes. Government refuses to legislate a second referendum. Parliament then passes a vote of no confidence in the government. An alternative, pro-referendum government is formed within 14 days, the prescribed period in the Fixed Term Parliaments Act. We think this is the less likely of the two referendum scenarios, but the idea of a short-lived government of national unity, with the sole purpose of pushing a second referendum, cannot be entirely excluded, especially as we are approaching a no-deal Brexit alternative. 

We remain convinced that a deal based on the current withdrawal agreement - but not necessarily the political declaration - is the most likely of all options.

Show Comments Write a Comment

November 28, 2018

Listen to the music, but watch the procedure

Two parallel dynamics drive Italy’s budgetary conflict with the EU. One is political: escalating or de-escalating comments by leading policy actors on either side of the conflict, expectations of a compromise rising or falling, markets sometimes reacting - as they did this week after news that the introduction of the citizens’ income might be delayed. The other dynamic is procedural, and grounded in the EU’s fiscal rulebook. So long as the government in Rome does not offer the European Commission substantial-enough concessions, the machinery ultimately leading to sanctions will grind on.

Reuters reports that on Thursday, the EU’s economic and finance committee - composed of member states' delegates - is set to endorse the Commission’s finding that an excessive-deficit procedure is warranted given the budget Italy has submitted for 2019. The decision was foreshadowed by finance ministers’ reactions and is entirely expected. We mention it only to highlight that notwithstanding shifts in the mood music, the procedure will continue absent a substantial Italian climb-down.

Does this mean that the rulebook leaves the Commission no room to respond to friendlier signals from Rome? Not quite. The rules allow Brussels some flexibility regarding the timing of the launch of an excessive deficit procedure, which has to be approved by a majority of the Ecofin. Reuters reports that a decision as early as December is now seen as unlikely, with January or February the preferred target dates. The delay gives both sides more time to seek a compromise. As Pierre Moscovici said yesterday in Paris, the search goes on.

Just as importantly, a delay would avert a scenario where Italy is expected to agree a package of eurozone reforms during the EU December summit right after an excessive deficit procedure having been formally launched against it. The embattled Emmanuel Macron is keen to get at least some of his reform proposals agreed in December, and the eurozone failing to do so would feed perceptions that it remains dangerously divided ahead of the next financial crisis. It is in everyone’s interest to give Italy time.

Show Comments Write a Comment

November 28, 2018

Macron's underwhelming energy speech

In response to the gilets jaunes, Emmanuel Macron did not give in. He neither put the carbon tax on hold nor scrapped it as the protesters demanded. Instead he promised discussions about alternative support at the regional level and presented his energy strategy to exit from nuclear power. Marrying the social and ecological movement together sounds like a good idea, but it did not work out that way.

Macron's only concession about the carbon tax is that the tax will be revised quarterly to adapt inversely to the oil prices in the world market. Policies to help households cope will be discussed at regional level. Within the next three months the regions are to set up forums to produce concrete proposals on questions such as whether to improve the public transport system or give premiums for the purchase of electric cars. Macron also evoked further tax cuts, conditional on public expenditure falling too. The current plan is to reduce the tax burden by 1% of GDP during his presidency, Les Échos reports, with hopes that the reform of the administration will produce further savings as a way to reduce taxes even more. This is still too vague to be meaningful at this stage.

Most of Macron's speech was about France's energy policy. France is still 80% dependent on nuclear energy. Macron confirmed his campaign pledge to reduce this dependency to 50%, but not so fast as his predecessor François Hollande since he moved the deadline from 2025 to 2035. Between 2025 and 2035 fourteen of the 58 nuclear reactors are to be shut down. At the same time Macron promised to push renewable energies, with wind farms tripling by 2030, and the area covered by solar panels to increase five-fold. Macron also promoted the development of batteries for electric cars with a Franco-German or EU strategy, to be less dependent on Chinese and Korean production.

To say that the reaction to his speech was underwhelmed is an understatement. Not concrete enough, not bold enough, not quick enough. Many dismissed it as another technocratic response. It did not calm down the protesters, nor did his energy politics enthuse the environmental front. Postponing solutions while not giving immediate relief only seem to increase uncertainty. Even LREM MPs find it difficult to work out whether citizens will in the end have to pay more or less from their budgets. Macron moved, but not enough.

Show Comments Write a Comment

This is the public section of the Eurointelligence Professional Briefing, which focuses on the geopolitical aspects of our news coverage. It appears daily at 2pm CET. The full briefing, which appears at 9am CET, is only available to subscribers. Please click here for a free trial, and here for the Eurointelligence home page.

 

Recent News

  • April 09, 2019
  • What can go wrong now?
  • April 13, 2018
  • German support for eurozone reform next to zero...
  • ... and no support for France on Syria either
  • A French sermon
  • Why the euro endures
  • April 19, 2017
  • Shadows of money
  • Breppe Grillo vs Eurointelligence
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • January 29, 2019
  • What comes after plan B fails? Plan C, of course. C for cliff-edge
  • Gilets jaunes, how to structure a movement in free flow?
  • European Court of Auditors criticises Juncker’s investment fund
  • February 26, 2018
  • Angela Merkel's cabinet
  • March 27, 2017
  • Governing formation troubles - Northern Ireland edition
  • Did Trump present Merkel with a bill for Nato?
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • September 23, 2019
  • Corbyn’s last big battle
  • Germany’s CO2 compromise meets all targets - except the climate targets
  • November 13, 2018
  • Peak Salvini?
  • Protest uberisation
  • January 05, 2018
  • Catalonia's government by Skype
  • The case for EEA membership
  • February 28, 2017
  • Is Hamon losing the right wing of his party?
  • Something we just don’t understand
  • Solve the problem
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • May 31, 2019
  • Salvini’s frightening strength
  • The significance of Corbyn’s latest flipflop on the referendum
  • 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
  • November 09, 2017
  • From street protests to road closures
  • What Russia wants
  • January 31, 2017
  • Project fear against Italexit
  • On how not to frustrate Brexit
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • October 21, 2019
  • Philippe to brace for more union protests
  • Greens are the electorates' new favourite
  • February 07, 2019
  • Forget Tusk - the real action is elsewhere
  • On David Malpass and the Trump legacy
  • May 28, 2018
  • A no-confidence motion that could backfire
  • The political repercussions of a historic referendum in Ireland
  • Why the lack of an international role for the euro matters
  • September 15, 2017
  • Juncker dragged into the Catalan fray
  • What to say in Florence
  • How to fill the gap left by the British MEPs
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • December 03, 2019
  • What to look out for in the last week of the compaign
  • Trump threatens tariffs on French luxury exports
  • April 26, 2019
  • How Brexit has given rise to different perceptions of reality
  • The EP, not Madrid, will boost Spanish clout
  • How realistic is a Gaullist Europe?
  • September 17, 2018
  • About the new partnership between Russia and China
  • EU ponders Irish backstop protocol to help May
  • February 07, 2018
  • A short note on bitcoin
  • July 04, 2017
  • On the CDU’s programme
  • Macron defines his presidential style
  • Why do we criticise modern macro?
  • November 28, 2016
  • And now what Monsieur Fillion?
  • The inescapable logic of an interim agreement
  • On Germany's foreign policy post-Trump
  • How to lose against the populists
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • September 30, 2019
  • A pyrrhic victory for Kurz
  • Will there really be UK elections?
  • April 01, 2019
  • Meaningful IV
  • Caputová elected: a turning point for central Europe?
  • October 02, 2018
  • Whatever it takes - diesel version
  • Is Macron's European discourse too simplistic?
  • April 06, 2018
  • Schleswig Holstein collapses Spain's strategy against Catalan separatism
  • On the implausibility of conspiracy theories in the Skripal case
  • October 09, 2017
  • UK is starting to prepare for a no-deal Brexit
  • Why Germany will resist meaningful eurozone reform
  • April 12, 2017
  • Macro in a state of denial
  • Where Schulz is vulnerable
  • Schäuble’s three party tricks
  • October 17, 2016
  • Ceta is dead for now
  • L’après-Hollande, c'est Hollande
  • SPD against Russia sanctions
  • Nissan to join customs union and other fanciful tales
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • October 17, 2019
  • A dangerous game for the EU
  • After Brexit, get ready for a German EU budget rebate
  • June 10, 2019
  • How to create Brexit facts
  • The new Alde is already in trouble
  • January 31, 2019
  • EU will play hardball until February 14, and stick to backstop beyond
  • French left and right moves ahead of EP elections
  • Tighten the belts as the economy prepares for landing
  • September 25, 2018
  • Be careful what you wish for - second referendum edition
  • May 21, 2018
  • Another snap election in the UK? Tories are preparing
  • Merkel and Putin - the beginning of a beautiful friendship?
  • January 15, 2018
  • Is the section on Europe for real?
  • Can Drahos upset Zeman?
  • September 11, 2017
  • Turkey issues travel warning for visitors to Germany
  • How nasty is the AfD?
  • May 08, 2017
  • A message of hope
  • Barnier's not so easily agreed Brexit principles
  • The rebirth of the paranoid conspiracy theory
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • August 23, 2016
  • Sarkozy launches candidacy in a book
  • Rajoy plans to try again in October
  • Turkey recalls ambassador from Austria
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • December 03, 2019
  • What to look out for in the last week of the compaign
  • Trump threatens tariffs on French luxury exports
  • November 08, 2019
  • Rethinking security - Macron edition
  • Rethinking defence - AKK edition
  • October 14, 2019
  • What is Turkey's medium-term game?
  • Germany sabotages EIB climate change policies
  • September 19, 2019
  • Italy's 2020 budget will be a moment of truth
  • Austria's soft faced far-right
  • August 27, 2019
  • Remain’s narrowing pathway
  • Macron's diplomatic masterstroke
  • July 29, 2019
  • No-deal Brexit is no longer just a scenario
  • No German warships to the Strait of Hormuz
  • July 08, 2019
  • Instex, forever around the corner?
  • Why Rory Stewart is not really what Remainers should be looking for
  • June 18, 2019
  • Retaliation threats over drilling
  • May 28, 2019
  • Greens in EP boosted by numbers and national politics
  • May 10, 2019
  • Target2 debate raises legitimate questions with unsatisfactory answers
  • No more German questions please
  • April 24, 2019
  • May's final and biggest gamble
  • Will the EP be Brexit's great parliamentary beneficiary?
  • Can Loiseau fight the far right given her past?
  • April 09, 2019
  • What can go wrong now?
  • March 25, 2019
  • An object lesson in realpolitik
  • On the probability of a no-deal Brexit
  • March 11, 2019
  • Ask what Europe can do for Germany - AKK's EU manifesto
  • February 26, 2019
  • Corbyn frustrates second referendum by supporting it
  • What is going on in Theresa May's mind?
  • February 15, 2019
  • Syriza suffers defeat in constitutional reform
  • A cautionary tale about experts
  • February 04, 2019
  • Watch out for the resurgence in Tory unity
  • The gilets-jaunes' effect on the European elections
  • What did he possibly mean by that?
  • January 23, 2019
  • The importance of the Aachen Treaty
  • The demise of small Greek parties over Macedonia
  • A speed limit on autobahns - what is the world coming coming to?
  • January 14, 2019
  • Our Brexit predictions
  • 1789 - Macron's version
  • Tsipras calls confidence vote after Kammenos pulls out
  • January 04, 2019
  • Will the AfD become the Dexit party?
  • Romania's corruption problem in the spotlight of its EU presidency
  • December 17, 2018
  • A second referendum is no closer today than last Friday
  • Philippe expects 3.2% deficit next year
  • December 10, 2018
  • ECJ says UK free to revoke Article 50, even inside extension period
  • A turning point in Macron's presidency
  • China has added Portugal to the list of its key EU partners
  • Belgium's coalition implodes over Marrakesh pact
  • December 06, 2018
  • There can be no deal as long as delusions of easy alternatives persist
  • What do the gilets jaunes mean for green fiscal policy?
  • December 03, 2018
  • French protests coming to a head this week
  • The Galileo fiasco, an ill omen for the future UK-EU relationship
  • November 30, 2018
  • May’s one and only trump card
  • Are the gilets jaunes as powerful as the 1995 protests?
  • Tsipras is dishing out more goodies
  • November 29, 2018
  • There are still a few options left for May
  • Berlin and Paris offer to mediate after Azov Sea incident
  • November 28, 2018
  • Short postscript on post-first-vote scenarios
  • Listen to the music, but watch the procedure
  • Macron's underwhelming energy speech