Category Archives: European Union

Britain, Economic, Europe, European Union, Financial Markets, Government, Italy, Politics

Italy’s populist vote and the uncertainty of the euro

EUROZONE CRISIS

IN a continuation of a wave of populist voting following Brexit and the election of Donald Trump, Italy has now followed suit. The ousting and forced resignation of Matteo Renzi, a very successful prime minister in Italy, adds yet more resonance to an EU that is breaking at the seams.

Despite what Marine le Pen, the far-right leader of France’s National Front, would like to portray, Italy’s revolt was not particularly based on an anti-EU stance. The top populist parties in Italy, Five Star and the Northern League, are not opposed to membership of the EU itself but they are averse to the Eurozone.

Nevertheless, it will hardly be seen as a ringing endorsement of the actions of the EU. The issues that have driven this latest referendum result – fears over the waves of refugees from Africa, a desire to rise up against the establishment, and unhappiness over the way the economy has been managed – are the same dissenting signals that we have seen elsewhere.

It is the economic impact that we have most to fear from the Italian result. There is also the issue of what that might mean for the negotiations over Britain’s exit from the EU. The Italian economy is far from healthy, despite marginal improvements in unemployment rates, and the banks remain weak. The country’s debt-to-GDP ratio, at a staggering 133 per cent, is second only to Greece’s in the Eurozone. Despite Italy being the Eurozone’s third largest economy, the country has contracted by around 12 per cent since the financial crisis of 2008.

President Sergio Mattarella will be anxious now to ease fears of instability. But regardless of what action he takes there will be a delay as the markets adjust. In reality, he remains helpless as to what he can do to ease those fears. How long that period of instability lasts is the biggest uncertain factor the markets face. Financial markets do not like uncertainty or instability.

There is a risk that the failure of a major Italian bank, such as the troubled Banca Monte dei Paschi di Siena, could set off a wider crisis. Making the banks strong enough becomes more difficult amid political ambivalence.

That could well provoke another crisis in the euro, at a time when Britain will be in negotiations about its withdrawal from the EU. The fusion of these events is not going to help any new euro crisis or aid Theresa May and her government getting a favourable Brexit deal.

The most telling comment yet has come from the German finance minister Wolfgang Schaeuble, who has said there was no reason for a euro crisis but that Italy urgently needs a functioning government. Startling. Mr Schaeuble infers that a currency crisis was not inevitable. Unfortunately, ending the uncertainty is more than just an Italian problem.

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Britain, European Union, Government, Legal, Society

The Brexit vote and the Supreme Court

BREXIT

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The government is to appeal against the High Court’s ruling that Article 50 cannot be invoked without Parliament’s support, so that means the case will now be heard in the Supreme Court. The Court comprises 11 senior judges.

Intro: Increasingly, it is not so much Brexit that divides the country as the bitter struggle to prevent it

ON Monday, 5 December, 2016, one of the most important questions of British constitutional history will be examined.

Eleven judges of the Supreme Court will hear the Government appeal against a High Court decision that 17.4 million votes in the EU referendum had no force in law. The High Court ruled that Parliament must be consulted before Article 50 can be triggered and negotiations with the EU begin; the Government believes that the referendum rendered that unnecessary. The Supreme Court will begin four days of hearings and a judgment is expected in January.

The 11 Supreme Court judges are faced with a highly political decision. With no written constitution to guide them, this is not a mere question of law, to be solved like a mathematical equation, with a definite correct or incorrect answer. Yet, this was precisely the spirit in which the High Court tried to approach the case, citing centuries-old precedents and ignoring the fact that the June referendum was an unprecedented historic act.

The free press should make no apology for shining a light on the Supreme Court. It is their job to scrutinise the powerful, and most voters have become aware just how powerful these 11 judges really are. With so little to help them in the law books, the clear risk is that the judges may be influenced by their personal opinions, no matter how assiduously they try to set them aside.

It is not a question of attacking the integrity and intelligence of our judges. But, on political matters, it is no more possible for judges than for anyone else to be perfectly neutral, uninfluenced by their own views or those of the people with whom they share their lives.

With only a simple majority needed for a ruling, it will be disturbing for Brexiteers to note that no fewer than five Supreme Court judges have publicly expressed their views which appear to be sympathetic to the EU, while six have close links with people who have publicly attacked the Leave campaign.

This matter should have been dismissed by the High Court. The last government held an in/out referendum on membership of the EU with the explicit promise that the result would be binding. While it is true that Britain is a representative (as opposed to direct) democracy, the EU vote was a rare exception to our political norms, an exception in which the people were asked to instruct the government what to do. Remainers cannot be motivated by concern for parliamentary sovereignty, because, if they were, they would have opposed the transfer of its powers to Europe since the Seventies. Militants see Parliament as an impediment to Brexit, a way of talking it out or watering it down. The application that has led to the current impasse was based on disgruntled mischief.

It is no fault of the Supreme Court justices that they find themselves in such a position of responsibility. They are only doing their job. And their job is a critical part of our constitution – testing laws and ensuring government actions adhere to them. However, there is no escaping the political nature of this case. The judges are being asked to rule on whether the Brexit-backing voters or Remain-backing MPs should have greater authority.

On numerous issues, the courts have defied Parliament and ministers; amending the ‘bedroom tax’, for example, or by outlawing extended solitary confinement for jihadists on grounds of human rights law. In such instances, they have become judicial activists. Which is all very well, but they cannot then complain when their decisions are questioned and their backgrounds and views analysed publicly.

The Government’s case is a good one and the Supreme Court may well agree. We should hope that the judges will remember the legitimacy of the referendum and its verdict, and not as the Government’s senior legal officer, Attorney General Jeremy Wright, has said that the vote be relegated ‘almost to a footnote’ as the Remain camp would hope for.

Increasingly, it is not so much Brexit that divides the country as the bitter struggle to prevent it. Most Remainers have probably accepted defeat and want to get on with their lives. Businesses need to know what is going to happen next. The world is waiting for EU negotiations to begin. It is in the national, even global, interest to proceed.

If the Supreme Court disagrees and says that Parliament must become involved, so be it. In that instance, it seems likely that Theresa May will smooth a Bill through Parliament to trigger Article 50 and limit any unnecessary delay. Of course, such developments would then attract dissenters who would attempt to dilute and frustrate any bill proceeding.

When governments ask the people what to do, they must follow their instructions. They are duty bound to follow through the mandate that has been raised. That’s the nature of how a democratic society operates.

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Britain, European Union, Government, Legal, Politics, Society

The ‘single market’ of the European Union

What is the single market?

A trade agreement that allows different countries within the EU to trade across borders as easily as they can within their own country, with no extra tariffs or negotiations.

What kind of trade?

The rules of the single market are governed by the “four freedoms”: the free movement of goods, people, services and capital from one EU member country to another. This idea was integral to the original EEC Treaty in 1957.

What happens when the laws of two countries differ?

If something being traded compromises one country’s national laws regarding public policy, security or health, the national rules take precedence. Otherwise, the EU will usually create a single market law which will legislate for EU-wide rules – for example on the noise made by electrical devices.

What are minimum and maximum standards?

A minimum standards EU law allows individual countries to add tougher rules on top to govern their own country. A maximum standards law means that the EU law trumps national laws.

Can non-EU countries be in the single market?

Yes, but the EU will usually impose a customs tariff on imports from non EU-member countries

BREXIT

Brexit Secretary, David Davis, has said Britain could continue paying into Brussels after it has left the European Union to secure access to the single market.

Mr Davis told MPs the Government wanted to “get the best possible access for goods and services to the European market” post-Brexit.

It is the first time a Government minister has openly signalled money could be handed over to Brussels to secure favourable trading terms with the remaining 27 member states.

Downing Street said his comments were consistent with the Government’s stated position that it was for the UK to decide how its taxpayers’ money was spent.

Chancellor Philip Hammond said he was “absolutely right not to rule out the possibility that we might want to contribute in some way to some form of mechanism”.

But Liberal Democrat leader Tim Farron said they showed the Government’s plans for Brexit were in “chaos” with ministers sending “mixed signals” about future arrangements outside the EU.

Mr Davis’s remarks came during Commons Brexit questions when he was asked if ministers would consider making a contribution “in any shape or form” for access to the single market.

He told the House: “The simple answer we have given to this before is, and it’s very important because there is a distinction between picking off an individual policy and setting out a major criteria, and the major criteria here is that we get the best possible access for goods and services to the European market.

“If that is included in what you are talking about then of course we would consider it.”

Mr Farron said his comments underlined the need for ministers to spell out clearly what their plans were for Brexit.

“The Government are in an absolute mess. We are seeing chaos over their Brexit plans as they keep sending mixed signals on where they stand on basic, fundamental questions like access to the single market, payments to the EU budget and freedom of movement,” he said.

“How can the Government claim they have a mandate for their Brexit deal when they don’t even know what it is themselves?”

But Mr Hammond said: “What matters is that at the end of the day the package we get is a package that maximises the benefit to the UK economy, allowing British businesses, British workers to continue selling the goods and services that they produce into the European Union, and vice versa of course.

“You can’t go into any negotiation expecting to get every single objective that you set out with and concede nothing along the way. It will have to be a deal that works for both sides.

Pro-Brexit Conservative Steve Baker played down the significance of Mr Davis’s comments, suggesting they had been “over-interpreted”.

“Paying for market access would not be free trade but the Government is right not to speculatively rule ideas in or out, however left field those ideas may be. Ministers’ comments seem to have been over-interpreted. I am not concerned,” he said.

And former cabinet minister Iain Duncan Smith insisted there was no way of reaching a deal to pay the EU for access to the single market.

Mr Duncan Smith told BBC Radio 4’s The World At One: “What he’s talking about here is how do you get a deal that allows British and Europeans to access each others’ markets without the necessity of tariff barriers or artificial barriers against service etc.

“I don’t think there’s any way in which you can reach a deal whereby you say ‘I’ll pay some money in and therefore you allow us access’, because you might as well have tariff barriers at that point.”

Prime Minister Theresa May’s official spokeswoman said: “What he (Mr Davis) said in the House this morning is consistent with what we have said to date, which is that it will be for the UK Government to make decisions on how taxpayers’ money will be spent.

“We’ve said, as we approach these negotiations, we want to get the best possible access for British businesses to trade with and operate within the single market, while also taking back control on immigration.”

During his appearance at the Despatch Box, Mr Davis also indicated the Government was open to some form of transitional arrangement with the EU as part of its Brexit strategy.

“We are seeking to ensure a smooth and orderly exit from the European Union, and it would not be in the interests of either side, Britain or the European Union, to see disruption,” he said.

“To that end, we’re examining all possible options, focusing on the mutual interests of the UK and the European Union.”

 

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