Vulcan View – Monday 1st to Friday 5th of October

Vulcan View – Monday 1st to Friday 5th of October

 

 

 

KEY EVENTS THIS WEEK:

BREXIT

Tory disunity increasingly evident at party conference 

The growing divisions within Theresa May’s conservative party were acutely evident at this week’s Conservative Party Conference, which saw activists queueing around the block for fringe events while the main hall went unfilled for cabinet speakers.

At one such fringe event, former foreign secretary Boris Johnson gave a speech intended to set him up as a prime candidate to succeed Teresa May at number 10. However, while he may have appealed to hardline Brexiters, his speech lacked the substance required to convince many of his credibility.

His successor Jeremy Hunt, in a similar bid to appeal to right-wing Tories, ill-advisedly compared the EU to the Soviet Union. He has been strongly rebuked by the European Commission’s chief spokesperson, Margaritis Schinas, who said: “I would say respectfully that we would all benefit – and in particular foreign affairs ministers – from opening a history book from time to time.”

The Prime Minister’s speech was full of criticism for her would-be challenger, as she called for greater conservative unity, however, the growing fringe movements seem to suggest the hollowing out of a moderate conservative base. Though Mrs May appears to have survived her party’s conference without significant threats to her leadership, she still faces the almost impossible task of securing a deal that will be approved by her party and the DUP at the negotiations with the EU27 in two weeks.

May re-launches Brexit plan with Chequers 2.0

After the drama and chaos that defined this week’s British conservative party conference, Mrs May will hope to reinvigorate Brexit negotiations with some sort of cohesion by re-launching her slightly-adjusted Brexit strategy that is already being dubbed Chequers 2.0. As in the previous strategy, this latest proposition from London will see the UK remaining in the single market for goods but not for services. Crucially however, is that several concessions will be made in an attempt to bring Brussels on board.

Downing Street appears to be now ditching its highly complex Facilitated Customs Plan which was intended to charge different tariff rates for goods moving into the EU and those remaining in the UK. Having been dismissed by Brussels, London now plans to have the same external tariffs as the EU and remain bound by its trade policy for several years more.

On the heavily contested issue of Northern Ireland, reports indicate that Britain will accept that goods entering Northern Ireland from Britain must meet EU standards. This means that there could be a potential for checks in the Irish sea but the invisible Irish border would be maintained. In a last bid to appease the EU, London will strengthen its commitment to the bloc’s single market by extending the scope of the Chequers plan to cover more goods and inputs that affect manufacturing costs. While the Irish government has backed these latest plans, it remains doubtful whether the Prime Minister will be able to satisfy the remaining EU capitals, not to mention her divided and fractious Conservative party.

EUROPEAN COMMISSION

Race for Presidency heats up as second EPP candidate emerges

The gruelling political campaign to replace Jean-Claude Juncker as the European Commission President picked up further this week when a second contender to become the European People’s Party candidate threw their hat into the ring. The former Finnish Prime Minister Alexander Stubb formally launched his bid on Tuesday to be the centre-right’s political group nomination, putting him up against the only other current candidate from the EPP, Manfred Weber.

Mr. Weber, the German MEP and leader of the EPP group in the European Parliament has a wealth of parliamentary experience and crucially has the backing of both Berlin and Budapest. However, Mr. Weber has no executive experience and is not widely known outside of Germany. Mr. Stubb meanwhile is a former leader of his country, along with being a former foreign and finance minister of a eurozone country.

Campaigning on a platform of reviving the EU’s ‘liberal internationalist’ values of openness and the rule of law, Mr. Stubb’s chances improved vastly this week after Michel Barnier, the EU’s Brexit chief negotiator, ruled himself out of the race. Unfortunately for the Finn, he comes from a country of just 5.5m people and has been largely absent from frontline politics for over two years, meaning his German counterpart still holds the lead.

ITALY

EU criticism and market fears seeItaly agree to cut budget deficit

After last week’s announcement from Italy’s populist coalition government that it planned to run a deficit of 2.4% gross domestic product (GDP) next year sparked fears across the market and led to widespread criticism from across the EU, Rome has embarked on a U-turn  in the past few days and vowed to curtail its future spending. Although the original announcement sparked fears across the bloc and set up a showdown between Italy and Brussels, Luigi di Maio, the leader of one of the ruling coalition parties, pledged not to backtrack on the plan ‘’by a millimetre’’.

Rome’s budgetary position changed this week, however, when government sources told reporters on Wednesday that the aim now was to reduce the deficit to no higher than 2.2% of GDP in 2020 and 2% in 2021. Despite these reductions though, next year’s target still remains at 2.4% of GDP. This latest development triggered welcome relief across European markets and sent Italian government bond yields downwards.

Further to the news leaked from government sources, the country’s economy minister, Giovanni Tria, confirmed that the fiscal shortfall would follow a downward path after 2019. Speaking to business leaders, he confirmed that ‘’the deficit will increase compared with the previous forecasts in 2019, but then there will be a gradual reduction in the following years’’. The country’s president, Sergio Mattarella is known to be keen on ensuring that there be as little deficit spending as possible and has been exerting pressure on the coalition government where possible.

BALKANS 

Referendum name-change throws up crisis for Macedonia

The EU, the US, NATO, and the Macedonian prime minister all welcomed the result of the country’s referendum name-change last Sunday after 91% of those who voted all backed the proposed name-change of the country to North Macedonia. However, whether the vote will be deemed suitable is highly doubtful after only 37 per cent of those eligible to vote came out to partake in the historic referendum.

The vote is part of an agreement reached between Macedonia and its southern neighbour Greece that would see the former country renaming itself, as Athens sees the use of its current title as a territorial claim to the Greek region of Macedonia and the legacy of the kingdom ruled by Alexander the Great. The successful and approved renaming of Macedonia would end a 27 year-old row between both countries and in exchange see Greece lifting a veto on its bid to join the EU.

However the turnout of Sunday’s referendum has thrown the name-change proposal into doubt, leading the Macedonian president Gjorge Ivanov to urge his government not to press ahead with the plan, stating that a ‘’silent majority’’ had rejected the proposal by boycotting Sunday’s referendum on the issue. This puts him at complete odd with the country’s prime minister Zoran Zaev who has backed the deal. If the name change did go ahead successfully, it would see Macedonia finally being drawn into the west’s orbit and away from the influence of Russia and China.