Political Briefing #86/2016

18/10/2016

POLITICS & POLICY

The Brexit debate continues to make the headlines in the UK and across Europe. On Sunday, Scottish Prime Minister Nicola Sturgeon said that Theresa May has no mandate to take the UK out of the European Single Market. Her comments came only a few days after ComRes released the results of a public poll asking British citizens to set out their priorities for the Brexit negotiations. 49% of respondents indicated the necessity of a favourable trade deal with the EU, whereas 39% claimed that reducing immigration should be the first objective of the government. More importantly, Sturgeon blasted the UK government by saying that some of ts ministers, such as Boris Johnson and Liam Fox, cannot be trusted to negotiate in the Scottish interest. Indeed, over the weekend the political trustworthiness of Boris Johnson suffered a blow: on Saturday, The Sunday Times revealed a pro-Europe column with Johnson’s signature that apparently dates back to Johnson’s official endorsement of the Leave campaign.

Meanwhile, the UK government’s cabinet is said to undergo deep tensions and be split between the supporters of a hard and soft Brexit respectively. Moreover, the UK government is defending its right to trigger Article 50 without a Parliamentary approval before a panel of judges. On October 16 Nick Clegg confirmed that Brexit could be delayed if the government needs to wait for the House of Commons’s approval. To pour oil on the fire, Christian Holliday, a Vote Leave coordinator for Guildford, launched a petition to make a crime out of any action supporting UK membership of the EU. However, Holliday was apparently suspended later on Monday.

As European governments are seeking to pass their budget laws, the fiscal objectives enforced by the European Commission are becoming once again a bone of contention between national and European leaders. In particular, over the past few weeks, Italian PM Matteo Renzi asked for more budgetary flexibility to tackle his country’s difficulties, such as the migration crisis and the recent earthquake that recently hit central Italy. Moreover, Renzi accused the European Union of taking no action on the key issues that matter to Europe.

On Saturday, the Italian government approved its budget for 2017, foreseeing a deficit of 2.3% of GDP, exceeding its previously declared objective by 0.3 points. Meanwhile, after the European Commission left Spain and Portugal off the hook for breaking EU fiscal rules in 2015, the Spanish Finance minister, Luis de Guindos, announced that Spain will not comply with the agreed deficit targets for 2017. In Portugal instead, the government is trying reverse austerity measures without giving up on its medium term fiscal consolidation objectives.

After the Eurogroup meeting of last week, the destiny of the Greek economy is becoming again one of the key concerns of European and International institutions. On Sunday, Alexis Tsipras was re-elected leader of the governing radical left coalition Syriza with more than 90% of votes. The Prime Minister called for a quick start of new debt talks in a bid to obtain a new haircut to the country’s outstanding public debt. However, divisions among International creditors (in particular between Germany’s Finance Minister, Wolfgang Schäuble, and the IMF’s director, Christine Lagarde) make it hard to imagine any fast progress on the matter. Moreover, Tsipras is facing increasing opposition within the country because of the harsh austerity program the government is implementing as part of the third bailout agreement. However, after the successful completion of the so-called first review, experts from the EU and the International Monetary Fund headed to Athens on Monday to work on the second evaluation phase of the reform programme. On the same day, several radical left-wing parties took the streets of Athens to protest against the labour market reforms which includes, among other measures, the end of collective wage bargaining.