The Weekly Vulcan View For March 4th – March 8th 2019 Featuring Analysis Of The Latest EU Developments

Key Events This Week:

Brexit – last ditch efforts before key Westminster votes

In order to persuade Labour MPs to support Tuesday’s vote on the draft Withdrawal Agreement, the government is unveiling plans to boost workers’ rights by announcing an additional clause to be inserted into the EU Withdrawal Agreement Bill. The new provision would allow the House of Commons to vote on whether to opt in to future EU legislation in the area of workers’ rights. Should the Withdrawal Agreement fail to pass through the House of Commons next Tuesday, MPs will be asked to vote on whether to take the prospect of no-deal with the E.U. off the table. In the event of a no-deal Brexit being removed then the House of Commons will vote on extending Article 50.

In a last ditch effort to secure concessions on the controversial backstop, Geoffrey Cox, the attorney general, travelled to Brussels this week to seek legally binding changes. Last November the attorney general had given legal advice stating that the UK would be in a permanent customs union with the EU indefinitely should the backstop be activated in its current form. In order to make changes to his advice the EU and UK have been working on potential areas to provide the legally binding assurance sought by the UK. EU chief negotiator Michael Barnier has considered the possibility of adding an adjunct to the Withdrawal Agreement, which would allow for Cox to change his legal advice. However it is difficult to see how this would satisfy critics of the backstop in Westminster since the EU has been adamant in asserting that Withdrawal Agreement cannot be amended. While Attorney General Cox noted there were “strong views and robust exchanges”, unsurprisingly, no breakthrough was achieved.

ECB delays interest rate hike

The ECB announced on Thursday that it will not raise interest rates before 2020, as it had previously indicated. The widely anticipated moves comes in reaction to continued economic sluggishness across the Eurozone which saw the ECB slash its growth forecast from 1.7% to 1.1%. ECB President Mario Draghi cited a number of factors for the slowdown including: uncertainty over Brexit, slower world trade, rising protectionism and weakness in some emerging markets.

Interests rates across the Eurozone have not been raised since 2011 and Draghi had previously indicated the intention to raise them during Summer 2019. Now it looks likely that no such hike will take place before the end of his term in October. All ECB base interest rates remain unchanged, meaning a base deposit rate of -0.4% and a refinancing rate of 0%.

As well as maintaining the base interest rates, Draghi also announced a new measure to stimulate growth: Targeted Long-Term Refinancing Operation (TLTRO III) will start in September 2019 and end in March 2021, each with a maturity of two years.

These new measures are intended to help preserve favourable bank lending conditions and the smooth transmission of monetary policy.

President Macron launches “renaissance plan”

In an op-ed published this week in all 28 EU countries the French president attempted to rally support behind his ‘Project Europe’ leading up to the elections in May. This roadmap, which would see changes to the current European Union, is aimed at addressing the core reasons behind the crisis that has been caused by Brexit and the rise of Eurosceptic parties.

Similar to his famous speech at the Sorbonne University in 2017 where he first discussed his ideas about reforming the European Union, Macron touched on the need for defending liberty and electoral democracy by setting up services to assist countries to withstand third party involvement in elections. He also proposed that a body be set up that would allow for direct dialogue between EU institutions and members states civic groups and business leaders. Macron stuck to his goal of achieving a zero carbon emission status by 2050 and his bid to halve pesticides by 2025 as well as guaranteeing fair economic competition between member states and with outside countries.

Macron’s most significant remarks were saved for the issue of fiscal harmonisation and competition reform . Specifically, he emphasised what he said was the need for a collective EU approach to the taxation of digital companies across Europe. The president also proposed a rethink of the EU approach to its current trade and competition policy. He stated that the EU “should reshape our trade policy, penalising or banning businesses that compromise our strategic interests and fundamental values.”

DATES AHEAD

Monday 11th – Sunday 17th March

Mon 11th – Thurs 14th: European Parliament Plenary Session (Strasbourg)
Tuesday 12th: ECOFIN Meeting
Tuesday 12th: Parliamentary Votes on Withdrawal Agreement Bill (House of Commons)
Wednesday 13th: Parliamentary Votes on No-Deal Brexit (House of Commons)
Thursday 14th: Parliamentary Votes on extending Article 50 (House of Commons)
 

AND BEYOND

Mon 18th: Foreign Affairs Council Meeting
Tues 19th: General Affairs Council Meeting
Thurs 21st: EPP Summit (Brussels)

Compliments of Vulcan Consulting, a member of the EACCNY