So Dilma Rousseff is gone, at least for now. Over the next 180 days, Vice President Michel Temer will set out an economic agenda focused on the consolidation of public accounts and on business-friendly market reforms, while Dilma’s impeachment trial continues. This begs the question of how much Temer can realistically hope to achieve in the 180 days he has in power. The answer depends on what he and his allies see as being really at stake.
The IMF’s ‘Article IV’ assessment of the UK economy is dominating headlines for its roundly negative assessment of a vote to leave the EU - but beyond its Brexit judgments, the report is a telling insight into the IMF’s current outlook on some key policy questions.
The EU’s Competition Commissioner Magrethe Vestager announced yesterday she had blocked the proposed merger of Hutchison’s Three and Telefonica’s O2 in the UK. This marks a clear departure from the policy of her predecessor, Joaquin Almunia, who had approved a series of mergers which reduced the number of mobile competitors in national markets from four to three. In contrast, Vestager asserted that only having three mobile competitors in the British market would have had a negative impact both on investment in mast infrastructure and on retail prices for British consumers.
There has been some comment this week at the German decision to use Monday’s Eurogroup to push for a change to the way sovereign debt is risk weighted by EU banks, as part of a wider set of steps to move the banking union dossier forward. The German argument is that there is a necessary political trade-off between accepting a measure of collective liability through a new deposit guarantee scheme and a change to what Berlin sees as the subsidy of zero risk weights across all Eurozone sovereigns.
TDI redux. The EU’s trade defence instruments (TDI) reform package was officially put back on the agenda by the Dutch EU presidency today after having been shelved in 2014. However, this apparent new impetus behind TDI reform is not the result of a sudden new consensus on merits of the Commission’s 2013 proposal in itself – which died a slow and mangled death in Trialogue between the Council and the European Parliament - but of another problem that needs a solution. That problem is the question of how or when or if the EU awards China ‘Market Economy Status’ (MES) in 2016. Our analysis of this problem is here.
The SNP have unexpectedly lost majority power in Scotland – what does this mean for the Scottish independence movement? Is it a sign of reversion to the pre-independence referendum status quo? Or are there signs that the SNP have actually helped drive a bigger shift in Scottish politics?
Flicking through the news channels in the last two weeks has revealed an image of Turkey sliding deeper into political turmoil. One of the reasons for this is President Erdogan’s ambition to change the political system to an executive presidency, a path we can now say with near certainty he has chosen over economic reforms. The game he is playing is about numbers. His AKP has 317 seats in parliament which is not enough to change the constitution. Only 330 votes would allow him to unilaterally put constitutional changes to a referendum, and with 367 votes the AKP could do it alone. This simple arithmetic demonstrates that achieving an executive presidency would require extraordinary measures.
Picking carefully through the numbers from the March 13 state elections in Germany brings home an important point about just how blue collar the AfD has become as a party. The AfD which did well in Baden-Württemberg, Rheinland-Pfalz and Sachsen-Anhalt, as it was expected to do. In doing so, it demonstrated how the crisis has transformed the party from one of professors into one of economic and cultural protestors.
Today’s budget included a tax break for self-employed workers. The government’s approach is a rare example in Europe of promotion of the self-employment model, though the prospect of a comprehensive strategy remain remote while the government pursues its deficit elimination strategy.
London always likes to think it is a step ahead of Brussels. In electricity generation policy it may just be. EU Energy and Climate Change Commissioner Miguel Arias Canete has just given a speech to the European Electricity Regulatory Forum in Florence on completing the internal market for electricity in Europe. He set out both an ambitious and pro-market program, calling for the need for “price signals for investment in adequate capacity or demand response”. So far, so anglo saxon.