Political Briefing #43/2017

06/06/2017

POLITICS & POLICY

The economic, fiscal and monetary policies of the EU and its Member States are under the spotlight. On Friday, Bulgarian Finance Minister Vladislav Goranov pledged that the country will undertake reforms to allow his country to join the Eurozone in the future. While the country currently does not meet the formal criteria to access the Eurozone, Goranov called the Member States of the Monetary Union to accept it in the Exchange Rate Mechanism (ERM-2), a preliminary step in the way to the a full euro membership.

Meanwhile, in the Czech Republic, the leader of the liberal ANO party, Andrej Babis, blasted the common currency. Babis argued that the euro would “bring nothing good” to the country, EurActiv reports. Babis, a former Finance Minister and a billionaire, is set to become the next Prime Minister, according to recent polls. National elections will be held in October.

On Thursday, the European Commission and the Italian government stroke a deal on the rescue of the world’s oldest private financial institution, the Monte dei Paschi di Siena. Competition Commissioner Verstager and Italy’s Minister of Finance Padoan, agreed on a common plan according to which the Italian government will recapitalize the bank with €6 billion. Nevertheless, Monte dei Paschi is understood to need some €9 billion in total to fix its current problems. Moreover, the European Central Bank (ECB) has yet to declare the bank solvent. As a guarantee for a sound restructuring process, the European Commission required the Italian government to agree on salary caps for the bank’s top management. In a critical commentary published on the German daily Die Welt the Southern European country is cited as the one of the biggest problems for the Eurozone at the moment. A few months ago, a study released by the Italian investment bank Mediobanca overtly mentioned the possibility for the country to leave the Eurozone.

In other news, snap elections are making the headlines in the UK. After the tragic terrorist attacks of the last few weeks, in Manchester and London, Labour party leader Jeremy Corbyn, called for the Prime Minister to resign her office, as national police forces complained about lack of resources. Nevertheless, Theresa May called off any criticism ad said to be looking to win the electoral race. Recent polls point at a slight majority for the Conservatives. Meanwhile, Foreign Affairs Minister Boris Johnson accused Corbyn of staging with the enemies of Britain, after his remarks on security inside the country. In the aftermath of the attacks, many commentators cast doubt over the UK’s ability to tackle the threats of global terrorism once the country will leave the European Union.

Meanwhile in Ireland Leo Varadkar won the leadership contest of the Fine Gael party, after former Prime Minister Enda Kenny resigned from that position. Varadkar, 38, is set to become the country’s new PM, representing a stark break with the old political class. The young leader said that a hard Brexit would damage the country and that Britain does not deserve to be punished for its decision to leave the Union.

In France, labour market reform efforts by the Government are under the spotlight, as the Ministry of Employment announced that it will send a working schedule to social partners by Tuesday evening. The communication shall serve as a common agenda for all involved stakeholders in order to proceed swiftly with the reform programme. Meanwhile, the French newspaper Le Parisien published a document that is understood to outline some essential building blocks of Macron’s planned labour market reform, among which the introduction of enterprise-based working contracts and agreements. The Government said that the document does not represent a base for discussions with the social partners.