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

September 19, 2019

0

Why the chances of a deal are better than they look

There have been a lot of jokes about the German car industry coming to the rescue of the Brexiters. Admittedly, even we thought they would mount a somewhat more robust defence of one of its largest export markets. But it is important also to remember that all action will occur at the end. Angela Merkel said so herself. She wants a deal. A reminder of the German position came when Norbert Roettgen, chairman of the foreign affairs committee of the Bundestag, slapped down Xavier Bettel's grandstanding gesture at the beginning of this week. 

If you look at it from a technical point of view, as so many journalists and experts do, you could easily fool yourself. Successful EU negotiations are always preceded by periods of technical despair. We agree with Laura Kuenssberg of the BBC: it is impossible to mind-map your way towards a deal. It is politics that will decide. It's not a procedural issue.

James Forsyth argues that, if a deal is agreed, it would probably pass parliament this time. His conclusion is underpinned by some interesting information he got from Downing Street: if a deal were agreed, it would come with a threat by the EU that no further extension would be offered. Readers may recall that we suggested this very route to Theresa May - as opposed to her fateful three-way bet between deal, no deal and no Brexit. That ended with majorities for nothing. If the EU pledges not to extend, the choice narrows to deal-vs-no-deal. That will be the only way for the deal to pass. If Johnson manages to reduce the rebellion in his own party to about 5 or 10, there would then be enough Labour MPs to support the deal. Elections would then follow at some point.

The electoral dynamics also favour this scenario. The latest YouGov poll now has the LibDems ahead of Labour after they pledged to revoke Art. 50 without a referendum. 

The problem for the LibDems is that this policy self-destructs once the UK leaves before the next elections. This means the LibDems are desperate for elections to take place before Brexit is settled. It is the only chance for their policy shift to have meaning. The incentives for Labour are the exact opposite. The Remain alliance is permanently broken.

Labour's only chance of coming to power is for Brexit to be out of the way, followed by elections shortly thereafter. This is also why we think that Jeremy Corbyn will look the other way if some of his MPs end up supporting the withdrawal agreement. 

It looks to us that Corbyn is already looking beyond Brexit. The Times reports this morning that he is considering reversing one of the last remnants of Blairite history: the change in clause 4 of the party's statutes from a socialist to a centrist mantra. The FT reported yesterday that John McDonnell is supporting the abolition of private schools. All that radicalism would be lost in a pre-Brexit election.

Our other stories

We also have stories on the DUP signalling openness to a Northern-Ireland-specific deal; on stress in the US repo market; on the difficulties to agree Italy's 2020 budget; on what the repeat of elections in Spain is for; and on Austria's new soft spoken leader of the far right.

Eurointelligence Professional Edition

For premium access, please log in or register 
for a free 3 day trial access to the Eurointelligence Professional edition. The best independent intelligence on the eurozone in a fast and easy to read format.

We have a publicly available short version of Eurointelligence Professional Briefing, which focuses on the geopolitical aspects of our news coverage. It appears daily at 2pm CET.  It only covers a portion of the full briefing, which appears at 9am CET, and is only which is available only to subscribers.

A message from Wolfgang Münchau

Welcome to the eurointelligence.com homepage.

Since 2006 we have been providing our readers from central banks, European and international institutions and the financial sector with our daily morning newsbriefing, each morning, at 9am CET, Mondays to Fridays. We are independent from governments and institutions, so you get our honest, sharp and frequently humorous take on the news and the debate. The subjects we are currently focusing on are all the issues relevant to the eurozone - the discussion about Greece, the lacklustre economic recovery in the eurozone, but also external influences, like the discussion on Britain's future in the EU and the EU relations with Russia. 
Many people were surprised by the re-emergence of the eurozone crisis. Eurointelligence readers would not have been. We have given our readers an honest assessment of what and what has not been resolved, at a level of a detail that has no match in the published media. Eurointelligence is the place to go to keep ahead of events in the eurozone.
I would like to invite you to register for a free 3-day trial, without commitment, so you can judge for yourself.

Wolfgang Münchau
Director Eurointelligence