Archive for the 'EU matters' Category


The consequences of what has already happened and the consequences of what is yet to come

Sunday, January 8th, 2017


Britain is Brexiting, Trump is triumphant in the USA, France is flirting with the Front National and in countries as diverse as Sweden, Austria and the Netherlands, the far right is doing more than alright.  Yes, yes, but what does it mean?

Much energy has been expended analysing why populism and the alt right are doing so well right now.  Rather less has been spent on considering the practical implications not just for individual countries but for the world as a whole.

The single most obvious consequence, from which many other consequences will flow, is that there will be less co-operation between Western governments in both the short and medium term.  Britain by definition is seeking to co-operate less with other EU countries by Brexiting.  The prospects for harmonious working relationships with other EU countries during the transition and for a while thereafter look bleak.  Meanwhile, Donald Trump’s agenda looks to set a radical discontinuity from that the USA has previously followed, with all the indications that he is going to take an aggressive “America first” approach that will set the USA at odds with its historical allies on many subjects.  Other hard right politicians and populists trade on putting their own country first at the expense of other countries that are perceived to be free-loading in some way, so if they are electorally successful they will be looking to reduce co-operation too.

So we are entering a period in the short and medium term where Western countries will no longer aspire to co-operate with each other to anything like the same degree as previously.  This reduced co-operation will lead to more competition between different Western states, some continuing to operate as a bloc and some now acting individually.  This will inevitably reduce the collective effectiveness of all of the Western countries.  So Western governments will weaken relative to other countries, over and above the weakening that is taking place as the rest of the world closes the gap economically on the West.

This is not a new trend.  With the EU having been internally divided for some time, the formalisation of one aspect of those internal divisions through Britain leaving the EU is merely a continuation of this decline.

This weakening will be felt most strongly among the more weakly performing Western countries under the most stress.  Both France and Britain have pretensions to global importance that are not backed up by their economic performance.  Their pretensions are likely to become steadily less sustainable.

So, other governments are by default going to become more influential.  We have had lots of commentary about how Russia is projecting its power, but it is merely the most visible (and probably not the greatest) beneficiary of this trend.  China will benefit most as the non-Western country with the largest economy and the greatest global reach.  India also will see enhanced standing.  Other countries will more effectively be able to play off Western powers that compete against each other.  Soft power just got a lot softer. 

All the time, Europe will seem less and less relevant as power shifts south and east.  This may be the moment that confirms when Europe falls off the pace of the very top tier of world civilisation.  If so, it may well prove to be the most important inflexion point of the century.

Just as Western governments will weaken relative to other countries, they will weaken relative to non-government actors. Large corporations will be more influential with individual governments, since those governments will co-operate less on developing a common front.  Tax avoidance and arbitrage is likely to rise as governments compete more overtly with each other to secure the tax revenues of large multi-nationals.  Similarly, the very wealthiest individuals who are mobile will be able to secure still more favourable treatment from states looking for taxes.  All other things being equal, collective tax takes of Western countries are likely to decline.

This in turn will make it still harder for European governments in particular to sustain their high tax high spend model of government.   This is unlikely to benefit the poorest in society, who rely on public spending.  Government is likely to prove an exercise in reducing public expectations of what government can afford.

Other non-government actors are also likely to benefit.  With declining inter-governmental co-operation, international criminals of all stripes are likely to find life easier.  Terrorists’ plans will be harder to track.  New criminal practices will be more difficult to spot.

All of these consequences arise before we get to consider the impact of increased informal trade barriers.  But that’s for another day.  I wouldn’t want to be accused of being too negative all in one go.

Alastair Meeks


Saved by der Bellen but what will the Italian referendum bring for the EU?

Sunday, December 4th, 2016

Another polling failure? A bit harsh when polls are banned for the final fortnight

Latest Italian referendum betting




What if Trump does prefer Putin over Juncker?

Saturday, November 19th, 2016


And where would that leave the Brexit process?

A weary-sounding Jean-Claude Juncker told students in his home state of Luxembourg last week that “we will need to teach the president-elect [i.e. Donald Trump] what Europe is and how it works”. In doing so, he erred badly, not for the first time. You can hear the derision dripping from the words, as, no doubt can the chief occupant of Trump Tower; not someone known for brushing off condescension. If Juncker is looking to build a relationship, it’s an odd way of going about it. Perhaps he’s miffed that Trump’s favourite European is the one who’s done more to break up the EU than anyone since Greece was let into the Euro.

But the belittling language is not the worst of it. Juncker has made at least two more serious errors of thought. Firstly, that Trump is interested in learning what ‘Europe’ is, and secondly, that he will like what he finds. The signs are that he’s not and he doesn’t, which should lead every European leader to ask searching questions of themselves and of their colleagues.

Trump was clear on the campaign trail about where he sees the main threat to the United States and the global order more generally, from radical Islam. He was also clear that as regards Syria, he was more interested in taking the fight to Daesh than in refereeing the war and awarding penalties against those acting badly.

On both counts, he has an ally in the Kremlin. Trump might well ask why the US is conducting sanctions against Russia over a secondary issue when the Eagle could be usefully working with the Bear on the primary one.

That ties into the question of the future of NATO. It was always designed as an anti-Soviet/Russian alliance and quite clearly still is. But is Russia still the geostrategic enemy for the US that it was in the Cold War? Leaving the short-term issue of Syria aside, isn’t the future challenge more likely to come from China – and isn’t that a potential threat to Russia too?

The question of contributions to NATO is an irritant but not a decisive determinant. It is the fortune of small states that their great power sponsors will back them almost irrespective of their own contributions because they’re needed as allies; it is their fate that their sponsors might turn their backs as their own interests change. Trump has clearly thought rather more coldly about America’s interests than any other president in decades and has determined, not unreasonably, that the world has changed since the 1940s. The likes of Juncker have yet to wake up to the fact that it is not business as normal.

Which has implications for the EU, where Brexit means that it’s also very much not life as normal. The eastern EU states and particularly the Baltic ones will feel vulnerable enough with the potential loss of US support and the prospect of US-Russian cooperation. The loss of one of the EU’s two big military powers combined with several years of internal wrangling are likely to heighten that sense of vulnerability further, in a way that proposals for a paper EU army won’t assuage (not that the UK’s forces are what they were).

But still, therein lies a new opportunity for the UK in the Brexit negotiations. Reaffirming a commitment to NATO and to continental security is not something that need come within the EU ambit at all. The two are, however, likely to go hand in hand: we are talking about almost exactly the same countries, after all. If the mood music can be kept peaceful, with those in the east in particular working to keep all sides talking, Britain ought to be able to get a decent deal. On the other hand, if the process stalls in acrimony and then falls off a cliff as the clock runs out, there’ll undoubtedly be questions about whether Britain shouldn’t follow the US out of any meaningful NATO commitment – and in such circumstances, rightly so.

David Herdson


The Brexiteers, Juncker’s fifth columnists?

Tuesday, October 18th, 2016


How the Leavers may have ultimately signed the United Kingdom up for the single currency, the Schengen agreement, an EU Army, and a United States of Europe.

Despite all the hype and bluster, the court case, and Parliamentary scrutiny, the United Kingdom will be leaving the European Union within the next few few years, and both will rapidly change because of Brexit.

Without the United Kingdom inside the EU stopping and vetoing more federalist ideas nor without our influence advocating pro business policies such as one of Margaret Thatcher’s finest acts as Prime Minister, the single market, the EU will become a very different beast to what it is now, especially amongst the Eurozone countries.

Whilst I’m not a supporter of the single currency, it always seemed flawed to me to have economic and monetary union without a full political union, and with the problems with Greece, I fully expect to see more integration in the EU, especially within the Eurozone.

But the EU doing very well won’t convince people in the U.K. to rejoin the EU, the other condition will be for the reality of Brexit to be seen as a mistake by the voters, or to put it bluntly, such as the fears of Brexit that Boris wrote about before he came out for Brexit actually happen.

Laissez les bon temps rouler might as well be the Leavers’ motto for a post Brexit U.K. but if the good times don’t roll then what? If Brexit turns out to be an economic mistake for the U.K., which translates to things like mass jobs losses, high inflation, and an economic slump then there may well be pressure to rejoin the EU. As an aside, it is far too early to conclude, one way or the other if Brexit has been an economic disaster or success, for every Sterling slide or a spike inflation, there’s some good news such elsewhere such as ING moving jobs to London. We will only have an idea once the final Brexit deal has been agreed if Brexit is good or bad for the economy.

We have some polling which already shows more Leavers regretting their vote than Remainers and with it looking like the poorest will be hit the hardest most by Brexit then that figure may very well rise.

In an ever evolving world some ideas that the U.K. public oppose today, they may very support in the future, for example with the possibility of Donald Trump in The White House, given Trump’s pronouncement that as President he wouldn’t automatically defend NATO allies under attack, supporting or joining a EU Army makes sense in those circumstances.

In any future deal for the U.K. to join the European Union, the U.K. will be the supplicant, so we won’t be able to dictate any favourable terms, and new members of the EU will have to sign up to things like the Euro, The EU Army, and the Schengen agreement, possibly all of them, and with the U.K. having already left the EU once, there maybe no future Article 50 option a second time. There would be a great irony if the Leavers end up helping the U.K. become a full member of a federal Europe, Jacques Delors, Valéry Giscard d’Estaing, Jean Claude Juncker, and Sir Edward Heath may end up thanking Leavers for their help in realising their dream.


P.S. – It won’t necessarily mean a future referendum on taking us back into the EU, all it needs a Pro/Rejoin the EU party to win a majority at a general election, 48% might not be enough to win a binary choice referendum but in the right circumstances, 48% can win a landslide under first past the post. Perhaps Leavers should start supporting electoral reform such as the alternative vote to stop this scenario unfolding.


Why I’m betting that it’ll be next July at the earliest before Article 50 is invoked

Friday, July 15th, 2016

Several bookies, including Betfair, have got markets up on when, if ever, Article 50 will be invoked. This is, of course, the formal process that would see the exit of the UK from the EU.

There’ve been two articles this afternoon that cause me to suggest that this will be later rather than sooner. Ian Dunt has an excellent explanation here while the ITV news piece in the Tweet above features the PM’s views.

She makes it very clear that there will be no invocation until there is UK-wide agreement and that, importantly, includes Scotland.

Even if that happens it is hard to see this being finalised before the end of June next year which is the mid time segment on the Betfair market. I’ve gone for from July 1st 2017 if at all.

The Dunt article, linked to above suggests that things could drag on until the next general election.

One of the smart features of the May’s cabinet choices is that it is prominent leavers who are handling this. My view is that this will make it easier to assuage the outers if things go on longer than expected. David Davis was talking about a much earlier exit before he got appointed but squaring the Nicola Sturgeon problem is going to be very tricky.

Mike Smithson


The betting on when will Article 50 be triggered, if ever?

Sunday, July 3rd, 2016



Pictures: First picture odds from Stan James, second picture, odds from SkyBet

There’s a couple of markets up on when Article 50 will be triggered, if you’re lucky to have a Stan James account, I wonder backing the any other outcome other option. It is effectively a bet on Article 50 being triggered in 2018 or later, not at all.

Now 2018 might sound far away, but we’re less than 18 months away from 2018, and given the gravity of the issues involved, I can understand why David Cameron’s replacement will want to take their time before triggering Article 50, so they can work out how to implement Brexit.

Many prominent Leavers are advocating the EEA/EFTA option which may include Freedom of Movement, which might be hard to reconcile with the heavy focus on immigration during the referendum campaign, time might be needed to soften up the voters who were expecting an end to mass immigration and free movement of people.

Of course this bet is assuming Theresa May becomes our next Prime Minister, Andrea Leadsom said this morning were she to become Prime  Minister she would trigger Article 50 as soon as she becomes Prime Minister, but were I to have a Stan James account, I’d be backing the any other option.


Update – Alastair Meeks has alerted me to the fact that there’s a couple of Betfair markets up on this as well. See here and here


Those who say that the bookies got EURef wrong don’t understand betting

Monday, June 27th, 2016

Ladbrokes betting barometer 2239BST June 23rd

Punters aim to make money not to provide an alternative opinion indicator

As well as the cries that the polls got EURef wrong there’s been something of a backlash against the betting industry which more than at any previous election had sought to promote itself in the manner that Ladbrokes did in the graphic above.

    They are being attacked for “getting it wrong” – something you’d never hear after, say, the Grand National when, as this year, a 33/1 outsider took the crown. By the same argument you could say that the “bookies get it wrong” whenever the favourite doesn’t win which is very often.

A problem is that some bookmakers have not helped themselves here. The Ladbrokes “barometer” and similar concepts from other firms did give the impression that they tried to present themselves as an alternative way of looking at opinion.

People bet to try to make money and have the satisfaction of being proved right. They are not doing it to provide an opinion poll alternative.

For me political betting is all about finding what I regard as “value” propositions where the bets available on the spreads, exchanges or with traditional bookies are understating my assessment of what could happen. Thus throughout the referendum campaign I never rated REMAIN at higher than a 55% chance.

Whenever I quote betting odds all I am doing is reporting what’s happening on the markets. Stating what the latest prices on an electoral outcome is not me saying that these are a correct indicator. In fact my whole betting approach over the decades has been to find bets where I think the prices are wrong and to suggest that there is value.

It should be said that I didn’t put a penny on REMAIN throughout the campaign even when it had big leads in the polls. The very tight prices that were offered simply did not provide any value. The risk of LEAVE doing it was always greater and I was never tempted.

What I think we are seeing is a reaction against the PR exercises run by some of the bookies to highlight their prices by such devices as the Ladbrokes barometer above.

Mike Smithson


Richard Tyndall on the exit strategy

Sunday, June 26th, 2016


Recent interventions into the Muslim world by Western powers post 9/11 have been characterised by one great failing. Whilst they have carefully planned and executed the military phase of the campaign, they have utterly failed to deal with the post conflict stage leaving behind failed states in Iraq, Afghanistan and Libya as a result.

The Brexit campaign is in danger of doing the same thing if they do not sort out, very quickly, what their next moves are to be in the removal of the UK from the EU. Some might reasonably argue that they have already left it too late and these plans should have been clear before they ever went to war. Part of this failing – if indeed it does exist – might be because the politicians running the campaign didn’t actually think they ever stood a chance of winning. As a result they were making hostages to fortune throughout the debate and now have to find some way to reconcile the many different promises they made.

As an aside I should point out that exactly the same problem would have existed post a Remain victory although the consequences would probably have taken slightly longer to reveal themselves.

The biggest hostage of course is the question of freedom of movement and the inextricably linked issue of access to the single market. Dan Hannan has come in for some criticism over the last 24 hours for advocating the European Free Trade Area (EFTA) solution that would see very little change in the principle of freedom of movement but would, if developed properly, probably see drops in EU migration because of the restrictions placed on benefits. It is a position he has maintained resolutely throughout the campaign and I suspect is one reason why he was not used by Leave in most of the main events, in spite of being one of their most effective speakers.

Clearly there are a number of barriers to be overcome to achieve such an outcome. Three are of particular importance.

1.      The electorate. Immigration formed the core of the Leave campaign and was almost certainly the reason they won. Opponents will rightly point out that there is no mandate for ignoring this issue and entering the UK into a post-EU settlement that does little or nothing to help control immigration. However, as I advocated before the vote, it is necessary for the new Government to legislate on behalf of all the electorate not just the 52% who voted for Brexit.

That means that already almost half of the population would probably be relieved with a  solution that maintained the single market and freedom of movement. But what of those who voted Leave?  We do have some indications of their views. A Yougov poll on 8th June showed that 42% of Leave supporters would prefer the EFTA/EEA route post-Brexit with 45% opposing. I would contend that this would indicate that overall there would be a clear majority of the country that would choose EFTA/EEA over complete separation from the Single Market.

2.      Parliament. Whatever deal is brought forward has to get through both houses of Parliament. We know that the members of both houses were strongly in favour of remaining in the EU and I find it hard to believe that they would block the alternative that would assuage many of the concerns that were held about Brexit.

Both of the above points make a series of assumptions that would need to be firmed up prior to actually attempting a deal. As a result I believe that it would be necessary for the new Conservative Leader to make the case for EFTA/EEA membership and then put it to the electorate in a General Election after first having invoked Article 50. Imposing such a deal without being clear what the view of the British public is would be unacceptable and I seriously doubt anyone has the stomach for any more UK wide referendums in the near future.

Finally I mentioned three potential barriers to such a deal. The third of course is EFTA itself which is why I hope someone from the Leave campaign is already in discussions with Kristinn Árnason, the current General Secretary to discuss the attitude of the four current EFTA members to the possible arrival of a fifth member in the near future.

Richard Tyndall