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European Political Economy

The EU has just enlarged, and faces many issues. Please use this forum to discuss any factors related to the EU's health, sense of identity, economics and politics.

Note that various articles on the housing markets of the UK, USA and Australia are recorded at House Price Crash Discussion Forums
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 11 Feb '18  09:10 : 0 recs : edited 4 times : last edit 11 Feb '18  09:11

Could achieve the end of the EU GSA ?

I agree that the EU will change very significantly in the years ahead !
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George Sore Ass
 09 Feb '18  13:18 : 0 recs : edited 4 times : last edit 09 Feb '18  13:19

German exports soar to record $1.6 trillion

Just imagine what Germany could achieve if it left the EU and signed some ambitious trade deals with the rest of the world.

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George Sore Ass
 05 Feb '18  10:22 : 0 recs

I think longer term, the EU may split, but not in the sense most brexitters think. I would expect that the western established democracies who want more integration will form a tighter union. That might be via the EU in some kind of two-level arrangement, or (if east european countries or others veto it) by simply leaving and setting up their own new union.

Even if this happens, I would expect that the single market and customs union and present level of integration would remain, but it would allow those other countries to go onto further political union. In time, if it was successful (and all the signs are that the integration of Europe so far has been hugely successful, at least in economic terms), others might opt to join.

I would expect the new grouping to include the original EU members, plus Ireland, Spain, Portugal and a few others. These countries are all broadly compatible. Eastern europe seems more nationalistic, xenophobic and with a worrying admiration for autocracy, and probably need a couple of decades more of democratic culture before they're ready.

The UK meanwhile, it's anyone's guess. May flip flops and tells whoever she's talking to what they want to hear. If it's the EU, she'll sign deals effectively confirming a customs union (since it's the only way the NI border issue can be dealt with). When it upsets the wingnuts, she'll rule out a customs union, to put off a coup.

At some point the UK is going to have to decide. But May seems unable to make a decision on anything. The country is split down the middle, parliament is split down the middle and the cabinet is split down the middle. And it seems that everyone got the PM they deserve, who appears to also be split down the middle.

At a time when clear leadership and a plan is required, Britain is still floundering around trying to figure out what it actually wants. Even those who wanted brexit must surely realise that the UK is not simply going to stumble into a good outcome, and with the present government, it's more likely that the bus is going to go off the cliff while everyone fights over the wheel.
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Slightly Optimistic
 03 Feb '18  17:40 : 0 recs : edited 1 time : last edit 03 Feb '18  18:10

The G20 for starters.

What do you think, little c?
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little c
 03 Feb '18  12:00 : 0 recs

Liam hints, but at what cost,SO?
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Slightly Optimistic
 02 Feb '18  16:56 : 0 recs


Certainly it looks as though the UK doesn't have much going for it outwith the politics of the European Union.

A member of the UN security council that China, by some accounts, wants to dilute. A member of the G20, whose most important wing is the Financial Stability Board chaired by the governor of the Bank of England; that influence is unlikely to last much longer either - see earlier comments in these forums on the questionable performance of the G20.

Continued membership of the European Union seems the answer. But the EU's longevity is also in doubt; the politics of the EU are unsatisfactory and likely to remain unchanged despite the trends we see. Interesting to see that the media, including the FT [China believes in free and fair trade too, President Trump] and Carnegie Europe are exploring the crucial subject of global trade. Judy Asks: Is the EU Getting Trade Right?

Political changes in the future? Africa is becoming a big player. A presentation at the LSE recently told us that Africa by 2025 will have a larger population than China or India. By 2050-2070 it will have the world's biggest working age population - 18 to 58 year olds. Unemployment is reckoned by that time to have reached 50 percent. I don't think this was fake news.
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George Sore Ass
 02 Feb '18  12:17 : 0 recs


I don't think China telling the UK it is not interested in a trade deal has anything to do with them not wanting to have a 'straitjacket' or be bound by rules. I assume it's simply because they don't regard the UK with 60 million people, and an economy that is likely to be in retreat because of brexit, as worth spending the required time on. It's clear China was involved in TPP and I would assume they would consider a trade deal with the EU or US, both of which are large established economies.

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Slightly Optimistic
 01 Feb '18  10:49 : 0 recs

One common global language that many rely on, Thoughtful, is regulated finance.
The Belt and Road Initiative should meet cross-border standards. Mrs May's comments on China's BR initiative are roughly in line with the views of Australia, France, Germany, the European commission and the US. It was also reported that China's flagship project still lacks a significant western endorsement.

Unfortunately governments at the G20 repeatedly vote against trust in global finance. EU members included. Imminently hegemonic China, for example, might reasonably ask why it should straitjacket itself in the present system of finance, as GSA tells us Liam Fox is now hinting.
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George Sore Ass
 01 Feb '18  10:03 : 0 recs : edited 1 time : last edit 01 Feb '18  10:08

Liam Fox talks down chances of China FTA

Asked about a China/UK FTA, Dr Fox told Sky News: “We are looking to see where we can get improvements with that, whether it’s done with a gold standard FTA, whether it's done by a series of measures for market access and mutual recognition, or equivalence the whole range of tools in the box.

So now Fox, one of the lead brexitters, is preparing the ground for the UK not getting a major FT deal with China, and so instead he's talking about other trade improvements. So much for one of the key brexitter arguments, that the UK will be free to sign such deals. Of course it will. Be it seems having been to China, Fox has had a dose of reality. No doubt the Chinese have told him they're not interested in wasting years formulating and signing a deal with a piddly little country that's just chosen to cut itself adrift from the huge EU single market and whose economy will almost certainly be going backwards for the next 10 years. From their point of view, it's a no-brainer.

Dr Fox also confirmed that many measures to boost trade and open up foreign markets, short of an FTA, can be undertaken now – while the UK remains inside the EU’s customs union.

He said: “Self evidently we can do it in a customs union because we can do it now, while we are still in the EU.

This looks awfully like Fox preparing the ground for staying in the customs union. Hot on the heels of Davis preparing the ground for accepting full EU rules during any transition.

We know Fox has seen the economic assessments the government produced itself, which by all accounts are awful. And it seems clear he's been chatting to the chinese about a FTA, and been told quite unambiguously to forget it. No doubt other countries have told him the same.

Project reality. Maybe the idealists, having been put in charge to deliver what they promised, are finally realizing they were off with the fairies and either need to wind their necks in, or face going down in history as the ones who drove the bus off the cliff, by doing something all their own analyses were telling them not to do.

The UK faces humiliation regardless. There are only three possible outcomes. It either backs down and accepts a humiliating halfway house deal loaded up with the obligations and economic benefits, but without the power. Or an economic collapse. Or simply cancelling brexit, a total capitulation. It is ironic that the ones arguing to make Britain great again, were by their vote, the architects of perhaps its biggest international humiliation the UK will have faced since Suez.

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 01 Feb '18  09:08 : 0 recs : edited 2 times : last edit 01 Feb '18  09:10

Sitting having breakfast in a hotel the other morning , German tourists one side , French the other side , several nationalities around us and surprisingly they didn’t speak or understand English !

So that is the EU all talking and discussing all moaning and grumbling all making lots of comments and suggestions and none of them understanding each other ?


Misunderstanding each other !
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Slightly Optimistic
 31 Jan '18  17:34 : 0 recs

Leaving may be very painful. The Brexit news today includes EU rejects Brexit trade deal for UK financial services. We are told that the EU has now rejected a Brexit trade deal on financial services, which could hit a sector that is Britain’s biggest source of exports and tax revenue.

Meanwhile the PM is visiting China on a sales trip where she said the two countries would continue to work together “to identify how best China and the UK can co-operate on Belt and Road across the region and ensure it meets international standards".

Mrs May's comments on China's BR initiative are roughly in line with the views of Australia, France, Germany, the European commission and the US. It was also reported that China's flagship project still lacks a significant western endorsement.

Unified action by the West can encourage China to weigh up the political arguments. In fact Downing Street said Beijing had already made a commitment to cut steel capacity by 200m tonnes by 2020, and had already cut 100m tonnes since 2016.

However in all this I am reminded of Ronald Reagan's words: "Trust but verify", something that G20 governments [all?] repeatedly refuse to countenance - for example on global public spending of $trillions. Not a good example for the West to show China.
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George Sore Ass
 31 Jan '18  16:39 : 0 recs

I don't really have any problem with the UK government leaving the EU. That is after all what the referendum result decided.

But given the closeness of the vote, it would be reasonable to expect that the government would try to steer a course that reflected that, and would lean towards a Norway or Swiss model.

Instead, the same people who spent the referendum campaign talking up how successful Norway and Switzerland were outside the EU (but inside the single market, with freedom of movement) are now busy saying that just won't do, and that the UK will be just as successful outside the single market.

I suspect the UK will end up accepting a humiliating brexit deal, that will be a long transition that can only end when a solution to the irish border is found (there isn't one). Meanwhile, it will lose all influence over laws, and the EU will finally be able to enact transaction taxes and clamp down on offshore banking.

There really is no option but to remain in the single market. And so the brexitters need to ask themselves whether they're prepared to either drive the bus off a cliff (I don't believe any sane party will be prepared to do this) or accept essentially all the obligations and costs of the EU, but without any say or control over it. Because that is the most likely outcome at present.
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Slightly Optimistic
 31 Jan '18  10:55 : 0 recs : edited 1 time : last edit 31 Jan '18  10:57


Interesting comments.

Yesterday a member of the House of Lords highlighted the problem for a parliament of a democratic decision, if invited as many governments refuse to do. He once asked his elderly aunts how they'd like to spend an afternoon. They had a discussion and they arrived at a democratic solution. They'd like to go to the cinema tomorrow. So he looked in the local paper and discover that the only films on offer were 'Reservoir Dogs' and 'Texas Chain Saw Massacre'. What was he then to say to his highly nervous and indeed squeamish but much loved aunts. "You must stick with your democratic decision", or should he say "now you know what's on offer, what do you think".

What's at stake here? The future of the European Union. It seems hugely important that the EU survives to become an effective voice on the world stage in what is becoming a discussion between only the US and China. They are edging towards a purely economic world in which politics plays little part.
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George Sore Ass
 31 Jan '18  09:44 : 0 recs : edited 2 times : last edit 31 Jan '18  09:48


The argument that the EU might disintegrate looked more plausible in the run up to the brexit vote. But since then, the Eurozone economy has boomed, and even the 'weak' economies that were bailed out are growing strongly. The turnaround in Portugal for example is very noticeable. In the four years I have been here, unemployment has gone from some 17% to around 8% and falling fast. Growth in the EU seems to be robust, and across the board from north to south, east to west. There is a lot confidence, and the EU side seem to be bossing negotiations.

Since the UK voted out, it has gone from being ahead of the US and EU, to being bottom of the pack in terms of growth. It's being held up essentially by strong growth either side of it, but it's clear that brexit is having an impact, and the UK has not left yet. If there was a strong government with a plan, then one could argue there was a clear direction. But it's been chaotic, May lost what majority she had in a disastrous election and not just the public, but the Tory party and even the cabinet still have no agreed plan on what they actually want, let alone what they can actually get. Nobody would be surprised if May was ousted, and then the Tory party descended into civil war over her successor. Not a great foundation on which to negotiate the most important relationship in the UK's history since WW2.

Far from questioning EU governance, I think the UK will be spending much time questioning its own governance. The government's own analysis suggests anything from a 2% to 8% hit (depending on the hardness of brexit). And yet this is dismissed by the government's own pro-brexit ministers on the basis that 'government forecasts are always wrong'. Is this supposed to inspire confidence in the government? That it can not only commission reports of critical importance, but can then dismiss and disregard them when they don't say what it wants? This is not politics, this is religion.

I would not bet against another country or two leaving the EU, but if there are, it will be an eastern European country with a little putin autocrat and a populist, racist agenda, no doubt with putin himself having had significant involvement. But France? No way.

The UK on the other hand. Northern Ireland voted strongly remain, and borders a country that is 60% wealthier than the UK per head, and probably 100% wealthier than Northern Ireland, per head. Scotland voted strongly remain too. If brexit is anything close to the economic catastrophe that the UK government's own internal analysis suggests, it seems hard to believe there will not be strong independence / reunification movements in both countries.

Of course brexit might be a success, and the EU might collapse. But anyone looking at the current state of play, with the EU playing a spectacular passing game, 5-0 up in brexit negotiations at half time while the UK players fight among themselves each time they pick the ball out of the net, would be hard pushed to come to such a conclusion.

Of course, it suits Macron and others to talk about such things if only to scare people. But don't forget, he (a committed European) stood against Le Pen (a committed pro-leaver) in a head to head, and got 2/3 of the vote.

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Slightly Optimistic
 30 Jan '18  14:51 : 0 recs

The UK economy of the future will do worse if it leaves the European Union? One counter-argument is that the EU itself might disintegrate soon. Many members are restless, with Macron suggesting a couple of weeks ago that if national governments allowed referendums throughout the EU then there would be a wholesale vote to leave.

The EU had so much political promise but it is falling apart. An actor on the world stage beside the US and China?

Here is a view from the German economy ministry’s Advisory Council on one aspect of where the present arrangements will lead.
The Road to a European Transfer Union

A comment before the referendum in the UK was that a Brexit might encourage the EU to rethink its governance - no sign of this yet.
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George Sore Ass
 30 Jan '18  09:32 : 0 recs

Cabinet briefing - UK economy to be 8% smaller with hard brexit

The document suggested that chemicals, clothing, manufacturing, food and drink, and cars and retail would be the hardest hit and every UK region would also be affected negatively in all the modelled scenarios, with the north-east, the West Midlands and Northern Ireland facing the biggest falls in economic performance.

Well, the muppets in the north east and west midlands voted for this. But Northern Ireland voted heavily remain. If it's hard brexit, in 15 years, they'll probably already have voted out of the union and joined their far richer southern neighbours (Irish GDP per head is about 60% higher than UK GDP).

But at least the UK will be poor and proud, with bendy bananas and blue passports. And we won't have the Germans telling us what to do, even if the cost was impoverishing ourselves and losing the financial sector to Frankfurt.
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Slightly Optimistic
 21 Jan '18  17:17 : 0 recs : edited 1 time : last edit 21 Jan '18  17:20

Regulated global finance appears to be the commendable aim of France's president.

However the difficulty in securing this is apparent in China sticks firmly to its path to globalisation by the FT's James Kynge.
The Davos splash made last year by Xi Jinping, China’s leader, derived from his apparent defence of globalisation. His message played well to the globetrotting elite, but a year later the disharmonies between China and the west are proliferating.

The idea that China would be integrated into a western-led global system created under Pax Americana looks to have been wishful thinking. . .China on one side is building a state-driven, hybrid economy while espousing its own distinct vision for globalisation. For its part, the west’s adherence to rules-based, free market economics is undermined by the “America first” doctrine of Donald Trump, the US president.

“The west does its thing; China does its thing. Countries get a bunch of money from China and they do it China’s way. Countries get a bunch of money from us and they do it our way", says former US Treasury Secretary Lawrence Summers”.

fundamental question: what is the system of global governance in which the US and the west and China are all going to participate?

The Belt and Road Initiative (BRI), through which China intends to boost commerce with about 70 countries in Asia, Africa and Europe, puts Beijing in the driving seat of a new type of multilateralism. The BRI diverges from the US playbook in that it does not seek to negotiate a free trade treaty with member countries but promises infrastructure projects financed and built by Beijing.

Can a disintegrating EU really get agreement on new rules for global finance? The absence of enforceable rules there is already apparent - eg 2008.
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Slightly Optimistic
 18 Jan '18  12:32 : 0 recs : edited 1 time : last edit 18 Jan '18  12:32

A key issue for the next 10 years is whether Russia can be persuaded to work collaboratively with the other great powers.

See below. In the same series of interviews last year Fareed Zakaria stressed the difficulty in getting cooperation from Russia. Oil states want and thrive on instability.
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Slightly Optimistic
 18 Jan '18  11:11 : 0 recs : edited 2 times : last edit 18 Jan '18  11:15

Another contribution to one of the serious debates of the moment. From Niall Ferguson. In an interview last year he blamed the West's voter opposition on taking down all constraints on international capital flows - this led ultimately to a succession of international crises of which the most spectacular was 2008.

In a speech at Peking University this month, he says there are two choices. First, China and the US collide over both commercial and geopolitical issues and fall into the "Thucydides Trap" . Second,
The much preferable alternative is that China and the US recognize their common interests as great powers facing multiple threats, such as Islamic terrorism, nuclear proliferation, cyber warfare and climate change. But they will not be able to do so as a team of two. They will need the support of the other great powers represented as permanent members of the UN Security Council: Britain, France and Russia. A key issue for the next 10 years is whether Russia can be persuaded to work collaboratively with the other great powers.

Improving global finance does not feature specifically nor does a fragmented European Union - both of which might prove even more impossible.
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Slightly Optimistic
 12 Jan '18  08:15 : 0 recs : edited 1 time : last edit 12 Jan '18  08:55

The US's National Security Strategy sets out the world's political scene that Europe is entering into. Not just implications for the Indo-Pacific region.
The US National Security Strategy: Implications for the Indo-Pacific
past administrations’ aspirational approach to China and Iran — seeking to shape them into “responsible stakeholders”

This NSS explicitly singles out China and Russia as competitors that have emerged to “challenge American power, influence, and interests.”

For U.S. allies and partners in the Indo-Pacific region, the NSS suggests the strategic importance this region has for the United States. The Indo-Pacific appears ahead of the Middle East, which has dominated past U.S. administrations’ strategic attention. The affirmation of the U.S.leadership role in the Quad group of the United States, Australia, Japan, and India (while expecting Japan and India to take greater initiatives in the region) is also a stark contrast to the reference to Europe.

China has not only been referred to as a U.S. competitor that challenges America’s leadership in the world and the international order, but it also has been singled out for its aggressive investment and other economic activities in the areas outside the Indo-Pacific region, including Latin America and Africa.

Incidentally President Trump of the US and Prime Minister Modi of India are said to be attending Davos this year - a follow up to the star act of China's president in 2017. The White House's interpretation of 'America First' is meeting some opposition. It will be interesting to see the reaction at the World Economic Forum at Davos.*thole-comment-reaction-lawmakers-congress-2018-1
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