Closer to Brexit

As we are getting closer to the formal invocation of Article 50, discussions on Brexit have reemerged. The Economist describes how banks and firms are planning to move part of their business away from London, and which cities in Europe are more likely to intercept them. On The Guardian, Daniel Boffey discusses President Jean-Claude Juncker’s comment that the UK will have to pay a “hefty bill” for accessing the single market from outside. Apparently, it was suggested that Britain would be asked to pay about €57bn (£48bn) in instalments over the next six years, to partially cover for the lack of future UK funding for the projects it already signed up for, and for the pensions of British EU officials.

Comparing Brexit and the election of Donald Trump as US president, Sara Helm praises the American press for its reaction against Trump, as they directly ask important and tough questions, and compares this to the feeble response to Brexit by the British media. In Britain, she laments, journalists are too scared to be seen as partial, and too accommodating with those in power.

Jon Bloomfield argues that the EU should take the initiative in the Brexit negotiations. First, they should publish a White Paper on their negotiating position, discarding the negative rhetoric of punishment and replacing it with a sincere cooperation. Second, the EU should open up democratic oversight, by having negotiators report regularly to the European Parliament, contrary to May’s preference for having no running commentary. Third the EU should extend the two-year limit on negotiations, which would not only demonstrate goodwill, but also postpone the final decision after the next UK general election.

The infinite Greek crisis

The New York Times Editorial Board claims that after squeezing Greece no matter the cost, European officials ought to recognize that their political and economic analysis so far has been flawed. The more they insist on getting Greece to cut spending and raise taxes, the further they get from reviving the country so that it no longer needs financial support. According to The Economist, European governments do not believe that Greece needs debt relief. But they insist on IMF participation in the bailout because they do not trust the Commission to oversee the Greeks. Locked inside the euro, unable to devalue, and confronted with German fears over a “transfer union”, Greece has been forced down the road of internal devaluation and austerity. The recurrent character of the Greek crisis reveals the problem of a bailout architecture that is unfit for purpose but from which neither creditors nor Greeks can extricate themselves.

Commenting on Greece and austerity, John Palmer suggests that Wolfgang Schäuble, the German economic minister, is as dangerous to the EU as Donald Trump. However different their characters, Schäuble’s long hegemony over the EU’s economic strategy risks igniting another, potentially lethal, phase of instability in the euro area. Schäuble believes that Greece needs more and not less “austerity water-boarding”, and he openly warns Greece that if it does not toe the line, it may have to leave the euro area whatever the consequences for Greece or the EU.

Stephany Griffith-Jones proposes a new progressive approach to counter such economic difficulties. Conservative parties have broadly failed in this endeavor, both because their policy design has been based on incorrect theoretical frameworks and because they are often captured by vested interests. An alternative economic package would include an increase in both public and private investments, greater symmetry of adjustment between current account surplus and deficit countries, and the strengthening of workers’ bargaining rights, leading to higher real wages.

This Ideas Monitor is by Carlo Burelli and Alexander Damiano Ricci

Photo Credits CC GUE/NGL

Download PDF

Also published on Medium.

Leave a comment
  • Facebook