Europe & Eurozone

Brexit Agreement: a bad deal, a worse Protocol - time to consult the people!

The main body of the draft Withdrawal Agreement is certainly long and detailed – a tribute to the efficiency of the EU’s legal services – but it mainly contains the sort of provisions one would expect for the terms of the separation, and for issues that straddle the departure timeline. 

But as for the so-called Ireland/Northern Ireland Protocol, that’s another matter altogether. It’s not a backstop for Northern Ireland, but an up-front set of binding rules for the UK as a whole.

The EU’s dysfunctional fiscal rules empower the far right, both in Italy and elsewhere

In this post, PRIME’s co-director Jeremy Smith and Progressive Economy Forum Council member John Weeks analyse the current “bar room budget-brawl” between the Italian government and the European Commission, and argue that the Commission’s wrong-footed response threatens to strengthen the far right. To avoid opening the door to fascism, the EU must ditch its bias towards austerity.

What Question(s) for a "People's Vote" Referendum?

The calls for a “People’s Vote” on the government’s proposed Brexit ‘deal’ (if indeed there is one) grow louder, but are especially contentious for the Labour Party, whose membership is more minded to “remain” than the public at large, which still seems fairly evenly split.

But the call for a People’s Vote is not so straightforward, partly now in terms of timing and Parliamentary arithmetic, but above all since it poses the tough question – what question to ask the People to vote on? Or indeed what questions, plural?

Italian elections: the 5 Star Movement's policy prescriptions

The policy prescriptions of the 5 Star Movement can be found in two main documents, published in 2012 and 2013. The most important is that of 27 December 2012, which has been posted on the website of the leader of the Movement, Mr. Grillo and thus can be conceived as the official programme of the Movement. 

Two basic remarks are in order. First, the class dimension of political decisions are ignored; second the restructuring of Italian capitalism in the years of the crisis are not taken into consideration.

How to weather the Brexit storm? Focus less on trade, more on investment

“Strong and stable” seems of a world so far, far away.  The recent Daily Mail headline “PM slaps treacherous Chancellor down” portrays a government in political chaos. Thanks to open, unresolved intra-Brexiteer warfare, ministers are unable to agree the basics of how to exit the European Union. This state of uncertainty intensifies just as the risks to British jobs and living standards are becoming starker and more potent. Ironically, just as we teeter towards the cliff, ONS data reveals that exports of goods to the EU grew over the last three months, while those to the rest of world fell back, a fact not devoid of dark humour.

Italy: the (ir)relevance of economic theory for leaving the euro

There is no doubt that the current institutional architecture of the Eurozone and the austerity policies implemented in recent years are irrational - leading to very significant increases in unemployment, waves of business failures, a drop in the growth rate and increases in the public debt/GDP ratio, not only in Italy.

The question, however, is whether or not it is advantageous for a single country to go back to its own currency and, more generally, whether the question of a potential return to the lira is actually relevant.  

The collapse of social democracy

Disillusionment with democracy is fuelled by the belief that social democratic politicians could not, and would not protect populations from the catastrophic impact of market forces after the 2007-9 financial crises. The political class appeared unwilling to restrain or tackle (through regulation) the sustained rise, and then implosion, of excessive private debt-creation by bankers and financiers, which in turn was used for reckless property speculation.

The best UK/EU transition plan? If we can, extend the Article 50 period

On 30th June 2016, just one week after the EU Referendum, I wrote this:

It has swiftly become clear, if it were not already so, that neither the government nor the leaders of the Brexit campaigns had anything resembling a plan for what to do if the people voted in favour of leaving the EU. 

Alas, over a year later, there is still no plan – and awareness that the Conservative government has simply dumped us here without any idea what to do next is becoming overwhelming.

So we badly need a transitional deal - but what kind?

Single Market Mythologies

Last week a cross-party group of MPs tabled an amendment to the Queen’s Speech calling on the government to commit to staying in the EU single market.  As a result of their support for the unsuccessful amendment, three Labour shadow cabinet members were forced to resign.

The amendment revealed a possible confusion by its supporters about the nature of the single market and the European Union.  

The gaping contradictions in EU bank bail-out law and policy

The EU’s hugely complex banking resolution framework is generally supposed to have one key goal – to ensure that failing banks are ‘resolved’ without recourse to public bail-outs, thereby breaking the link between banks and sovereigns…  The reality, we have seen today, is quite different – and, it seems, legal. 

The EU can just about argue that technically, the rules have not been broken - but overall, the appearance is of a policy in logical disarray once again.

An Open Letter to Jeremy Corbyn: Labour needs to act fast

After an exhausting and successful national campaign, it is hard for campaign strategists to think of next steps. But we are at a critical historical juncture, and a range of opportunities present themselves. Choosing the right political and economic strategy now is vital. 

If the aspirations of the British people, as expressed in the election result are to be fulfilled by Labour, and to avoid the dissipation of the momentum and energy generated by the campaign, it is urgent that Labour lays out a viable and popular political and economic strategy. We believe that the ideas outlined in this article would attract substantial political and popular support.

Lessons for the Euro Area - a simple model of savings, debt & private spending

This essay articulates the reason behind the prolonged deflationary bias of euro area policies by means of a simple (“T-shirt”) model where private spending depends on desired savings and sustainable indebtedness.  The EU Commission’s belief that it is possible to create jobs without creating new debt underscores a serious conceptual fault and a delusion that the savings-debt constraint to spending can be ignored. As long as a cap on public debt remains, the euro area will continue to live dangerously and remain vulnerable to shocks.

Making space for an economically democratic European Union

It is generally considered by lawyers and political scientists who study the EU that the Union has all or most of the attributes of a “constitutional order”, and that its Treaties are to be seen as providing a constitutional framework.

But many key economic and social policies are decided not through debate and elections, but via inflexible EU Treaties which lay down a specific economic ideology and policy framework. No matter how they vote, citizens are not allowed to choose a truly different set of economic policies. In the economic domain above all, there is a mismatch between the EU's constitutional democratic principles and the Treaties' detailed provisions.

 

It's time to revive Europe's democracy - There Is A Real Alternative!

Joint press release from PRIME & the Rosa Luxemburg Stiftung Brussels Offce on the launch of new report : Bringing democratic choice to Europe's economic governance

The 60th anniversary of the Treaty of Rome offers an opportunity to reflect on what the European Union has achieved – and how problems can be solved. We share the European idea, and express our aspiration to work for a European Union which in the coming decades is truly a force for peace, prosperity, democracy and social progress. 

But despite its commitment to democratic values, one crucial area in which the European Union does not permit legitimate democratic choice is the economic sphere.

Greece's still-falling GDP dispels creditors' "recovery" myth

The latest GDP figures for Greece, relating to Q4 of 2016, are disastrous. For Greece first and foremost, but also for the credibility of the EU and IMF's failed harsh austerity (but on the EU side no-debt-cancellation) policy.  Far from evidencing the long-promised recovery, they show a new decline in GDP – both on the previous quarter (after seasonal adjustment) and year on year.

Greek Tragedy in European Theatre: the Economic Consequences of Depression Economics

Since 2010 the European Commission, the IMF and the Greek and European political establishment have imposed a full blown internal devaluation programme that in Greece has caused a depression unlike any seen in Europe since WWII. The main drivers of the programmes have been an exaggerated and cruel implementation of the neoliberal policy agenda, including cuts in wages and pensions, increases in taxation, the fire sale of public assets at fire prices and severe cuts in funding for an already underfunded health system.

Q & A with Prime’s Jeremy Smith on Brexit, immigration and democracy

Earlier in the week U.K. Prime Minister Theresa May unveiled her vision for Britain’s exit from the European Union.  She couched her outlook in positive terms, speaking of Britain leaving the EU but remaining in Europe. To get a better sense of how realistic her vision is in political and economic terms, I also asked Prime Economics Co-Director Jeremy Smith - an expert on EU and national constitutional issues - for his take.  Here is the Q&A (18th January)  that resulted.

Brexit: reflecting the EU's neoliberal shift

For three decades the European Union has moved away from Christian and social democracy towards neoliberalism, constraining policy at national and EU level to conform to the ideologies of “free” trade, fiscal austerity and a deregulated labour market.

The British government urged its electorate to support not European unity or even cooperation, but a version of the European Union in which capital dominates labour.  If politicians on the continent continue to pursue that vision, Brexit will be the harbinger of things to come across Europe.

Controlling Eurozone current account surpluses - revisit the Treaty of Rome!

When the Treaty of Rome was first signed in 1957, it included an article 104 which required member states "to pursue the economic policy needed to ensure the equilibrium of its overall balance of payments and to maintain confidence in its currency, while taking care to ensure a high level of employment and a stable level of prices".

The Treaty of Maastricht repealed this article entirely. That was a mistake.  It's time to bring back a similar provision.