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January 07, 2019

What to look out for in the Brexit debates

This is going to be an obviously important month for Brexit - but so far there has been no material change from the position we were in before Christmas. Theresa May has not yet obtained the political clarification she was seeking from the EU. As of now she will lose the vote scheduled for next week, but we would not rule out another postponement - or a second vote. 

In the meantime, expect to see a lot of political manoeuvres. Over the weekend, a cross-party group of 200 MPs have proposed an amendment to the finance bill, to stop the UK Treasury from making tax changes without the consent of parliament in the case of a no-deal Brexit. This amendment cannot stop a no-deal Brexit because the no-deal Brexit is legally the default position. But its purpose is to turn a three-way choice between deal, no deal and revoke (through a second referendum) into a two-way choice between deal and remain, by making no-deal Brexit politically poisonous. In that sense it is a clever political move, but the 200-or-so MPs are not a uniform group. While they oppose a no-deal Brexit, some like Yvette Cooper of the Labour Party prefer a second referendum, while others like Nicky Morgan the Conservative chairwoman of the Commons' Treasury Select Committee wants to rally Conservative support for the deal.

We noted a comment by Will Hutton who writes that the consensus in parliament was that May would go for a no-deal in case of a defeat, and that she would ask for a three-month extension to prepare for it. We noted a lot of commentators making the point that this would contravene the EU's own position, but we think that the EU itself would have an interest in preventing chaos at the border, especially at the inner Irish border. We would agree with Hutton that this is the most probable of the no-deal outcomes. Where we disagree with him is on the assertion that a change of position by Jeremy Corbyn would be decisive. Even a parliamentary majority in favour of a second referendum - which we think is possible at some point - would in itself not change the position unless it were accompanied by a change of government, or a change in the views of the current government on the issue of a second referendum. We see no majority for a successful vote of no-confidence, and we don't think that May can seriously endorse a second referendum without destroying her own party.

We were stunned to hear Labour's Barry Gardiner proclaiming that, if Labour won a snap election, they would renegotiate the withdrawal agreement and obtain a veto over EU trade deals. This is obvious nonsense, but it contains a deeper message: Labour is going to sit on the fence all the way through. 

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January 07, 2019

Macron's last-resort tool for the gilets jaunes

The gilets jaunes protests picked up again in numbers for their eighth protest march last Saturday, with a hike in violent clashes. For the first time the violent ones among them targeted public buildings - town halls, gendarmeries, high courts and one ministry. According to the interior ministry there were some 50,000 demonstrators nationwide, compared with the 32,000 during the holiday period. Emmanuel Macron immediately condemned the extreme violence on twitter, and his interior minister assured that with 56,000 of security forces mobilised things could not run out of hand. 

This new turn in violence is a challenge and an opportunity for the government. Who decides, the electoral vote or street protests? Faced with the persistent and growing violence of the gilets jaunes, the government sets its hopes on to the regional consultations with citizens dubbed le grand débat. They expect this to be the solution to a crisis that never ends: the last resort when other means have been tried without success, neither concessions nor speeches.

The challenge for the grand débat is to get the peaceful gilets jaunes engaged without giving in to the violent threat and without letting the citizens dictating the policy agenda, writes Cécile Cornudet. The more violent the protests the more reason the government has to limit the exercise. In a way the violent group of the gilets jaunes is depriving the peaceful ones of their impact, remarks Nicolas Beytout. Also, the more diverse the subjects - abolition of gay marriage, reintroducing wealth tax, referendum - the more friction there will be with the government's own agenda.

Emmanuel Macron will decide the framework of the debates at a meeting with the mayors next week. Already the government is seeking to limit the questions not to undo the reforms already implemented. Bruno Le Maire assured that the wealth tax will not be reintroduced but is now open to forgo the abolition of the housing tax for the more wealthy ones. Gay marriage will not be discussed either. But ecological transition and institutional reforms are on the agenda.

There is a sense of urgency not only on the political front. Already last December the French economy took a hit stronger than expected due to the protests, registering the first decline in private sector activity after two and a half years according to a range of data and surveys as picked up by the FT.

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