One of the clichés in international cooperation is that national governments’ enthusiasm for sharing cost centres evaporates when talk turns to sharing profit centres. This explains the imbalance between joint investment in basic research and national commercial application of R&D, or the discrepancy between joint telecoms standards and ruthless national auctions for mobile phone spectrum. But it is the technocratic world of tax administration that traditionally exposes this most bluntly, with the need to raise revenue and to attract capital investment outweighing the desire for efficiency and fairness between national finance ministries. The final months of 2017 have delivered stark reminders that while the negative-sum game of tax secrecy may be ending, the incentives to play the negative-sum game of tax competition remain too strong for governments to resist.
Over the summer, it looked as if there might be a breakthrough in the long-stalled discussions over eurozone reform. Emmanuel Macron had been elected president of France, promising to overhaul the domestic labour market and make the country more economically competitive. German Chancellor Angela Merkel was quick to spot the signal and the opportunity. She suggested that she might in turn be amenable to some long-held French ambitions for the currency union.
Vladimir Putin’s announcement to run for his fourth, and probably final, presidential term is no surprise. Thus far, all the polls indicate he will romp home on 18 March next year. Indeed, polling day has been moved to mark the anniversary of the Russian annexation of Crimea to reinforce the significance of Putin’s proudest achievement in his third term in office.
One of the most contested issues, before and since the referendum on UK membership of the EU, has been the potential impact of Brexit on the UK economy. The exercise is almost as difficult now as it was before the referendum, because we still don’t know what Brexit will mean for the UK’s trading relationships, or the regulatory environment in Britain, two issues that will have a significant bearing on the long-term economic consequences.
After the withdrawal of the liberal FDP from coalition negotiations, German politics is faced with a similar dilemma to Spain in 2015-2016: an inconclusive set of elections, the unwillingness of the centre-left to support the incumbent centre-right Prime Minister, and ultimately the possibility of another set of elections. In both instances, it was up to social democrats to resolve the stalemate; what lessons can the German Social Democrats (SPD) learn from the Spanish experience?
The UK government’s official response to the Taylor Review on Modern Working Practices is expected imminently. However, there are major questions over whether ministers will be able to support many, if any, of Matthew Taylor’s wide-ranging recommendations for reforming UK employment law. While a wholesale reform of employment law seemed unlikely when May commissioned the Review with a majority government, the prospect for comprehensive reform seems even less likely now she has lost it.
Last Sunday’s regional elections in Sicily were the last major electoral test ahead of Italy’s general elections next spring, and they do not bode well for the Five Star Movement. The party had high hopes of winning the contest, in a region that saw the party’s best results in the 2013 general elections. After its victories in Rome and Turin in 2016, winning Sicily’s regional government would have been the party’s highest elected office, demonstrating not only that the party could win a serious contest, but also show “proof of concept” of what it would do once having control of the sort of domestic policy levers available to autonomous regions like Sicily. Instead, the Five Star Movement was defeated by a greater than predicted 5-point margin, a result that will likely demobilise a party’s base that had believed that the party could win and be a serious electoral force.
In New Delhi last week, I joined business and political leaders considering the prospects for the digital sectors in India and Europe. The differences and the similarities, in the outlook and the issues being confronted by policymakers in each market, are equally striking.
The parliamentary elections in Czech Republic last weekend produced an unsettling but not unexpected result. The moderate populist ANO party won nearly 30% of the vote, but fell far short of a majority in the parliament. Other anti-establishment parties – the Freedom and Direct Democracy party (SPD) and the Pirates Party – have significantly strengthened their positions. Support for the traditional parties, including Social Democrats who led the previous government for four years, dropped to single digits. Only Eurosceptic Civic Democratic Party (ODS) managed to regain some of its centre-right ground lost in the previous elections.