18 December 2015

Deepening EMU – Round-up of Key Events – December 2015

David Cameron took his proposals for EU reform to the ongoing European Council meeting, although he is not likely to reach an agreement until 2016. The launching of the Commission’s Green Paper on Consumer Finance was also a major event, along with the CRR and CRD IV impact in the economy.

By Paula Martín Camargo, Editor

This year’s last Brussels for Breakfast/Brunch, with the participation of Graham Bishop, delivered useful material for financial professionals operating in the EU: 116th Brussels for Breakfast, live on BBA TV and the 9th `Brussels for Brunch’ 30 minute discussion on CISI TV with CPD points which is available to Friends.

Political

Commission President Juncker at the European Parliament Plenary session on the Economic and Monetary Union said that the euro was a political project, and thus had to be supervised by the European Parliament. Seeking to tie closer bonds between EU institutions to make the Commission more political, he shared thoughts on a deeper cooperation under Stage 1 of the Five President's Report.  

This meeting was held ahead of the European Council, were David Cameron tried to persuade EU leaders of the need for the reforms he asked for in a letter to Council President Tusk, for him to campaign against Brexit with full commitment. This is indeed crucial, because a Brexit would leave Britain in dangerous 'splendid isolation', according to former Prime Minister John Major’s words. But a formal agreement is unlikely to be reached during the Council, given to the refusal by Tusk of the in-work benefits cut for workers from the EU proposed by Cameron. Graham Bishop studied the figures carefully and warned against this: the UK is already in full employment and cutting the “in-work benefits” would save just £1.5 billion (0.1% of GDP). Moreover, the loss from Brexit to the UK’s GDP might be hugely bigger, according to the report of the City of London on the total tax contribution of UK financial services: the Government would lose up to £66bn if The City business moved away from London. Vox EU produced another relevant study arguing that EU membership has brought benefits to the UK through three key mechanisms – trade, foreign investment, and finance, - and that a Brexit would entail heavy losses to the UK’s economy. PM Cameron will therefore have a lot of pressure to bear in the next months: a poll by Open Europe and ComRes  - conveniently published as the European Council started - has shown that a failure to win the key reforms of his proposal - safeguards for non-Euro member states and restrictions on new EU migrants' access to in-work benefits - could swing UK’s EU referendum vote towards the ‘exit’ option. [...]

Full article available for consultancy clients here