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

May 01, 2019

Labour votes against obligatory second referendum

It is interesting to see how the British media suddenly lost interest in Labour's decision on the second referendum, once the party's national executive committee voted in favour of Jeremy Corbyn's position not to change the party's current ambivalent policy. Yesterday's vote was a setback for the second-referendum campaign and specifically for Tom Watson, Labour's defiant deputy leader, who has argued in favour of an obligatory second referendum. 

The vote in the NEC became necessary because of the upcoming European elections. Labour's European election manifesto will thus continue to support a second referendum only as a last option - if the Tories were to push through their own version of a future relationship or in case of a looming no-deal Brexit. Since neither has a political majority in the House of Commons, that situation is unlikely to arise.

Yesterday's vote has a number of consequences. A victory for the second-referendum supporters would have unleashed a shift in the political dynamics. A Labour victory in the upcoming European elections could have been interpreted as a political signal in favour of a Brexit reversal. The only parties now openly dedicated to reversing Brexit are the LibDems, Change UK and the Green Party, plus the SNP and the Welsh Nationalists. 

The rejection of a second referendum also means that Labour is now less likely to change its policy before the next UK general election. The current policy would still allow Labour to support a second referendum, for example, if a new Tory leader were committed to a no-deal Brexit. 

But the most important consequence of yesterday's vote is the impact on the cross-party talks. If the second referendum supporters had got their way, they would have been able to frustrate any version of Brexit this side of a general election. 

Yesterday's decision to uphold Labour's ambivalent stance opens the way for a compromise. Theresa May said yesterday the talks with Labour would need to be concluded by the middle of next week. Labour is saying that the talks have been progressing well. We have noted before that the Brexit versions negotiated by May and the EU, and Labour's customs union, are not categorically as different as they may appear at first sight. On a technical level there is scope for a compromise, one that would allow Corbyn to claim that he managed to negotiate a customs union that protects the interests of UK workers and that protects the environment, an increasingly important subject in the Brexit debate. We think that May is ready to compromise - especially now that the future unity of the Tory party is no longer her main preoccupation. 

In this context, we noted the lead story in the Daily Telegraph this morning, which says that Tory eurosceptics fear that May would cave into Labour's demands. 

The main difficulty in these talks will be to find a majority of MPs to support any compromise. Second-referendum supporters have become increasingly extremist, to the point that they could reject a customs-union compromise. There are about 100 Labour MPs firmly committed to a second referendum. If they all were to refuse to endorse a deal, Corbyn would only deliver 140 votes or so in favour of a compromise, which means that May would need to deliver some 200 votes. That should be possible, but there are risks that Tory MPs might conclude that they are better off with a new leader and a new approach to Brexit. If both party leaders were to face simultaneous rebellions, a deal might be at risk.

We think, however, that Corbyn and May have a reasonable chance to deliver a joint majority in the House of Commons if they manage to agree among each other. May would be able to leave office having achieved her one and only political objective. Corbyn can focus on the social issues he likes to focus on, rather than Brexit. This is why we think the chances of a deal are higher than the zero percent probability UK political commentators are attaching to such an outcome.

Show Comments Write a Comment

May 01, 2019

On the link between output gap measures and the rise of political extremism

Adam Tooze has a brilliant article in which he debunks the notion of the output gap, which he identifies as the main cause behind the catastrophic economic policies pursued by the European Union during the eurozone crisis. The output gap measure is a moderately useful concept for fast-growing economies during normal times - when you need it the least - but it becomes hugely misleading during periods of extreme economic weakness, like from 2008 to 2015. 

Tooze writes that a backward-looking measure of potential output, when combined with stringent fiscal rules, can have truly perverse effect. In the eurozone crisis, when output collapsed suddenly, the metric of potential output also fell. This had the effect of narrowing the gap between actual and potential growth, and thus reducing the need for fiscal stimulus. The result was an economic doom loop that was particularly dramatic in Italy, where potential-output growth measures were revised down by some 15-20%. As a result, even modest growth would push Italy to a (wrongly) imputed level of stable output. The result was pro-cyclical fiscal policy, and constant battles between successive Italian governments and the European Commission.

The failure of the output gap measure is the primary cause for the wrong fiscal stance forced by the Commission on Italy during the crisis. Tooze writes that the country was in need of a significant fiscal expansion (of the kind it is getting now, we would add). This is unlike Germany, which operates much closer to its potential. Tooze concludes that it was unconscionable for European institutions to produce data showing that the fiscal stance of both countries should be similar. He writes that the consequence of such methods is to normalise an economic-policy disaster, with the known political consequences. 

"If centrists want to win the political argument they must offer their own constructive vision of the future. A technocratic sliding scale, which limits the notion of a member state’s potential to mechanical projection of the last dismal decade, is not realistic but fatalistic."

Show Comments Write a Comment

May 01, 2019

Berlin's inconclusive Kosovo conference

Should a territorial exchange be used to make Kosovo and Serbia ethnically more homogenous, paving the way to an eventual mutual recognition? Officially, this hot-button issue was not part of the talks Angela Merkel hosted this week in Berlin with Emmanuel Macron to discuss the situation in the West Balkans in general, and the recent deterioration in the relationship between Kosovo and Serbia in particular. The unofficial agenda was another matter.

Whether a land swap could work as the key to an elusive détente between Belgrade and Pristina is a question that is hotly debated both in Serbia and Kosovo, in the western Balkans overall and amongst the powers securing the region’s peace or otherwise involved in its dynamics. Washington is keen to facilitate anything that might allow it to cut back on its military presence. The EU itself is split over the issue, with Germany strongly opposed to the land swap and France open to discussing it. While Paris takes what it sees as a pragmatic approach, Berlin fears that an agreed land swap might open a Pandora’s box of territorial ambitions, encouraging ethno-nationalists from the rest of the Western Balkans to Russia and Ukraine to push for the changing of borders and the creation of ethnically homogenous territories.

The aim of the meeting was to get Serbia and Kosovo to pull back from their recent course of diplomatic and commercial confrontation, to demonstrate that the leading EU powers remain committed, and to display a degree of Franco-German harmony. Predictably, the Berlin conference brought no breakthrough in the matter, but then the process is ongoing.

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

  • October 17, 2019
  • A dangerous game for the EU
  • After Brexit, get ready for a German EU budget rebate
  • 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
  • June 20, 2017
  • How to soften Brexit?
  • The deep roots of Brexit: Thatcher and the Germans
  • 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
  • August 27, 2019
  • Remain’s narrowing pathway
  • Macron's diplomatic masterstroke
  • July 09, 2018
  • German panic about Target2
  • AfD level with SPD
  • How the EU could fail
  • May 31, 2017
  • Getting real in the debate on the euro's future
  • Russia's growing influence in Italy
  • 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
  • June 18, 2019
  • Retaliation threats over drilling
  • 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
  • May 10, 2017
  • PSOE primary campaign in full swing
  • Czech government crisis escalates
  • Backroom dealing on electoral reform in Italy
  • 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
  • April 06, 2020
  • The feedback loop of Covid-19 and inequalities - part 10 of our series
  • How confinement affects mental health
  • 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 06, 2020
  • A decade that started with a bang
  • What to expect of Spain's next government
  • Divide et impera: Macron's pension reform strategy
  • 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
  • March 11, 2020
  • While Italy is in lockdown, Germany allows football matches
  • Ireland grand coalition
  • 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
  • June 29, 2020
  • Édouard Philippe - mayor or prime minister?
  • Sir Humphrey, R.I.P.
  • October 17, 2019
  • A dangerous game for the EU
  • After Brexit, get ready for a German EU budget rebate
  • 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?
  • May 25, 2018
  • Rejected by US, Germany is turning towards China...
  • ...and France is turning to Russia
  • UK ties Galileo to security partnership
  • Germans are discovering miniBoTs
  • September 14, 2017
  • Bravo Mr Juncker
  • ... what he said about the labour market
  • ... and what his speech means for Brexit
  • 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 02, 2019
  • Will pension reform protests spiral out of control?
  • Malta's PM resigns over murder case
  • 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?
  • September 12, 2018
  • It is easy to criticise Chequers but very hard to come up with an alternative
  • February 05, 2018
  • How big is Germany's external surplus, really?
  • Macron's first election test
  • Coeure's endorsement of a fiscal union
  • July 03, 2017
  • Can Greece exit its programme without a credit line?
  • The softening Brexit
  • Macron's state of the nation address
  • 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
  • March 16, 2020
  • Why many of the Covid-19 statistics are misleading
  • September 17, 2019
  • Beware of the diplomacy of humiliation
  • Germany’s climate hypocrisy
  • March 18, 2019
  • May's deal still on the table. Don't rule it out.
  • EPP decision on Fidesz still open
  • On the defeat of liberalism
  • September 21, 2018
  • SPD ministers want to continue grand coalition
  • March 28, 2018
  • The real reason for the sanctions against Russia
  • Wishful thinking: Brexit edition
  • Wishful thinking: Future of euro edition
  • Wishful thinking: Italy edition
  • October 02, 2017
  • Catalonia recalls EU and eurozone instability
  • French trade unions increase pressure over labour reforms
  • Watch out for a political accident in the UK
  • Municipal elections boost Portugal's Socialists
  • April 10, 2017
  • Nein, nein, nein, und nein
  • Sounds like a bad Brexit story, but ain’t
  • On how not to exit the euro
  • 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
  • June 02, 2020
  • Watch out for Söder
  • Libya exposes European divisions
  • January 24, 2020
  • Is Germany anti-semitic and racist?
  • Did the Greek financial crisis play a role in Brexit?
  • September 18, 2019
  • No doubt, this is a constitutional crisis
  • Macron's immigration bid
  • May 13, 2019
  • Brexit Party has already changed UK politics
  • Orbán visits Trump, after a very long wait
  • Le Pen's appeal to the PiS likely to fall on deaf ears
  • January 04, 2019
  • Will the AfD become the Dexit party?
  • Romania's corruption problem in the spotlight of its EU presidency
  • August 28, 2018
  • Urban politics and national crisis - the Irish case
  • How anti-semitism became one of the main issues in British politics
  • April 25, 2018
  • Macron's pitch to Trump
  • Montoro in Schleswig-Holstein
  • The old world and the new
  • December 22, 2017
  • Will Macron be the new de Gaulle?
  • 2018 through the looking glass
  • August 21, 2017
  • Soft, getting softer
  • Tsipras' chances of a boost
  • On the fallacy of a middle-ground option for the eurozone
  • April 20, 2017
  • Don’t bet on Trump turning globalist
  • A note on UK election polls
  • December 20, 2016
  • The politics of terror
  • On Lagarde
  • Is a disruptive Brexit possible?
  • August 22, 2016
  • Gold for Brexit
  • EU and Turkey talking past each other
  • Switzerland is the next migrant transit country
  • On the death of neoliberal economics
  • 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
  • June 29, 2020
  • Édouard Philippe - mayor or prime minister?
  • Sir Humphrey, R.I.P.
  • June 01, 2020
  • Refugees' mass eviction in Greece
  • This is Brexit week again
  • May 05, 2020
  • Germany's cash-for-clunkers
  • What about the summer holidays?
  • April 10, 2020
  • Italy has folded for the sake of a deal. Plus ca change.
  • ECB governors agreed on size of bond purchases, less on composition
  • France triples its fiscal stimulus
  • Direct lending to governments, big and small
  • Some bad Covid-19 news from Germany
  • March 16, 2020
  • Why many of the Covid-19 statistics are misleading
  • February 19, 2020
  • Degrowth isn't enough to stem climate change
  • Is Renzi finished?
  • Welcome to Germany, Tesla
  • January 28, 2020
  • Moving forward or calming down on Macron's reform agenda?
  • Marjan Sarec' bold move
  • Is the EU about to overplay its hand in the Brexit talks?
  • January 06, 2020
  • A decade that started with a bang
  • What to expect of Spain's next government
  • Divide et impera: Macron's pension reform strategy
  • December 09, 2019
  • The next three days
  • November 19, 2019
  • Not the time to bet against the Franco-German relationship
  • German employers and union united against the debt brake
  • November 01, 2019
  • Beware of the fallacy of composition and hindsight bias - Brexit edition
  • October 14, 2019
  • What is Turkey's medium-term game?
  • Germany sabotages EIB climate change policies
  • September 26, 2019
  • Could Johnson be headed for an electoral landslide?
  • Macron's conquest of public opinion over pension reform
  • Marion Maréchal keeps dream of political comeback alive
  • September 11, 2019
  • What are the chances of a deal?
  • August 27, 2019
  • Remain’s narrowing pathway
  • Macron's diplomatic masterstroke
  • July 30, 2019
  • Forex shifts are object lesson in costs of complacent analysis
  • July 17, 2019
  • The dreaded scenario
  • Meet the Labour no-dealers
  • July 05, 2019
  • Why it is difficult to legislate against a no-deal Brexit
  • June 24, 2019
  • Economic reform has torn up the SPD - climate policy does the same for the CDU/CSU
  • Not intruding, not really
  • June 13, 2019
  • On the large and rising risk of a no-deal Brexit
  • Unite and divide - Act II of Edouard Philippe
  • June 05, 2019
  • Let’s talk about Boris
  • Will Kinal be the kingmaker in Greek elections?
  • May 28, 2019
  • Greens in EP boosted by numbers and national politics
  • May 22, 2019
  • Better start those no-deal preparations right now
  • Europe's real transfer union is from east to west
  • May 15, 2019
  • Why an anti-Macron vote may mobilise in this EP election
  • May's last throw of the dice - a meaningful vote on June 4 or 5
  • May 10, 2019
  • Target2 debate raises legitimate questions with unsatisfactory answers
  • No more German questions please
  • May 07, 2019
  • … while Macron’s European troubles have already begun, and might get even worse
  • Don't discount a Brexit deal
  • Is Tsipras too complacent?
  • Costa - the fiscally responsible Socialist
  • May 03, 2019
  • The pro-Brexit message from the local elections
  • Putin's silk road
  • May 02, 2019
  • Ahead of a meeting with Salvini, Orbán brands the EPP as suicidal
  • What role for trade unions amid gilets jaunes?
  • The church vs the EU
  • May 01, 2019
  • Labour votes against obligatory second referendum
  • On the link between output gap measures and the rise of political extremism
  • Berlin's inconclusive Kosovo conference