Member News

VULCAN VIEW: KEY EVENTS THIS WEEK

BREXIT

Pressure mounts on May as polls tighten in final week of campaigning

The huge Tory landslide predicted at the outset of the general election is at risk of falling apart, according to the latest opinion polls. With just over a week of campaigning remaining before the British public head to the polls, YouGov has the Tories just 3 points ahead and on verge of a hung parliament.

When Prime Minister Theresa May last month called for a snap election, most surveys showed her party securing an enormous majority that would of given her a greater mandate to push through her kind of Brexit. However, recent gaffes over the controversial ‘’dementia tax’’ and the resulting U-turn, along with criticism that the Prime Minister is dodging other leaders by refusing to take part in an all-party television debate, have seen the gap narrow considerably.

Rival polls point to contrasting outcomes, but what is clear is that next week’s general election will have implications for the upcoming Brexit negotiations. A large Tory win could see PM May being given greater flexibility to make certain comprises leading to a softer Brexit or it may instil a belief in her that she has been given a mandate to carry out a full and hard Brexit in accordance with the will of the people. If it does not occur and the Tories rely on other parties to secure a majority, it would undoubtedly lead to a changed British negotiation stance on Brexit, with the potential for greater compromise in the months ahead.

EU-CHINA

EU and China to forge deeper ties in climate change battle

After yesterday’s unsurprising announcement that US president Donald Trump will pull the country out of the historic Paris Climate agreement, the European Union and China have agreed to form a new green alliance as part of an initiative to take a leading role in the battle to reduce the level of global emissions. A two-day EU-China summit launched yesterday will see both countries embark on deeper collaboration that will ‘’lead the energy transition’’ toward a low-carbon economy.

Europe and China are determined to follow through with the Paris Agreement, despite the withdrawal of the US. As part of the new alliance, the EU will help replicate its own carbon market by funding the roll out of a national emissions trading system to China, raising the possibility of linking both schemes. In addition, both countries agreed to help developing countries reduce their carbon footprint, with the EU sharing its technological expertise and knowledge.

Addressing reporters at the opening of yesterday’s summit, EU climate commissioner Miguel Arias Cañete spoke of how China and the EU are ‘’joining forces to forge ahead on the implementation of the Paris agreement and accelerate the global transition to clean energy’’. Although both countries continue to differ on issues such as Beijing’s demand to be granted market economy status at the WTO, the partnership is further evidence that the EU is loosening its decades old relationship with the US and beginning to look eastwards for opportunities and partnerships.

EUROZONE

Future of Eurozone laid out in Commission Reflection paper

Efforts by the European Commission to implement further Eurozone integration will occur in a two-phase period, according to a document published this week that sets out steps to complete an EU economic union and Eurozone governance. The first stage calls on member states to commit to achieving a fully functional banking and capital market union before the end of 2019.

This would entail the establishment and implementation of a Single Resolution Fund to rescue failing banks and a European deposit insurance scheme that would protect citizen’s savings in the event of a failed bank. The planned second phase to occur sometime before 2025 would feature more radical plans to overhaul the current Eurozone system.

Among them is the proposal to replace the Eurogroup Presidency with a Eurozone finance minister whose role crosses both the Commission and the Council. The post would mirror that of Federica Mogherini’s EU foreign affairs role, giving the Eurozone one unified voice and representative.

A much more controversial proposal planned for the second phase would be the introduction of ‘’European Safe Assets’’ (ESAs). These sovereign bond-backed securities would package together national debt of different countries into a new asset in an attempt to encourage banks to diversify their holdings. After many failed attempts to restart essential Eurozone integration, this latest proposal may make some real progress given the determination shown by a resurgent Franco-German relationship to deliver real EU reform.

ECB to continue programme of QE despite strong Eurozone growth

President of the ECB Mario Draghi has rebuked calls by analysts to rein in the bank’s controversial Quantitative Stimulus policy, responding that he is firmly convinced that the Eurozone still needs ‘’an extraordinary amount of monetary support’’. Speaking at European Parliament Committee on Economic and Monetary Affairs, Mr. Draghi was steadfast in his belief that the central bank must stick with measures that include €60bn of monthly bond purchases.

With the Eurozone showing positive trends such as 16 straight quarters of economic growth and unemployment at its lowest since 2009, many market analysts believed that next week’s meeting of the central bank’s governing council would issue signs of a scaling back of QE. Mr. Draghi remains unconvinced however, acknowledging that although the worst of the financial crisis is ‘’now behind us’’, there remain underlying problems that require monetary support.

EUROPE

Brussels pressed by European publishers over stricter online privacy rules

Chief executives of over 30 European publishing companies have written to the European Parliament and Council over new online privacy rules that they believe will grant greater power over digital advertising to the likes of Google and Facebook. A host of newspaper companies such as the Financial Times, the Daily Mail, Le Monde and Die Zeit signed a letter outlining their concerns around recently updated European regulations which will bring in a concept of ‘’privacy by design’’.

The European Commission is set to bring in the new privacy changes that will allow users to opt out of cookies (the online feature that tracks the pages people visit when they are surfing the internet) such as Google Chrome, rather than on individual websites. The publishers believe that the majority of users will favour universal opt-out in their browsers which would in turn damage their ability to show adverts to readers.

The letter warned that if ‘’news publishers were unable to serve relevant advertising to our readers, this would reduce our ability to compete with the capabilities of dominant digital platforms for digital advertising revenues’’.

FRENCH LEGISLATIVE ELECTION

Strong polls show parliamentary majority within reach for Macron

Recently elected French President Emmanuel Macron appears to go from strength to strength as new polling points to his cross-party movement, La République En Marche, gaining around 30 per cent of the vote in the first round of voting on June 11th. After seeing off Marine Le Pen of the far-right National Front, Europe’s new poster boy has been riding on a wave of pro-European support and now has a chance of securing a parliamentary majority.

Such an outcome will make it easier for him to pass essential reforms to kick-start the lagging French economy that is burdened by youth unemployment. His continued rise in popularity comes after prominent meetings with other world leaders such as US President Donald Trump at the G7 summit and President of Russia Vladimir Putin just this week.