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[...]From the perspective of the rest of the EU, the deal is awkward. EU leaders calculated, rightly in my view, that the cost of Brexit — a British exit from the EU — would be too high at a time when the future of the EU itself is in doubt. They were ready to pay ransom money to prevent a calamity. The question is: did they pay too much?
Their single most important concession is their agreement, for the first time, to a two-tier Europe. This is not an opt-out, an exemption or a derogation. This is not a Europe of variable speeds or variable geometry — expressions that have been used in the past to denote different degrees of integration. This is a formal exemption from the goal of ever-closer union. I am not sure whether this has any legal significance but it matters as a political statement.
How can the EU pursue ever-closer union when one of its most important EU members enjoys a permanent exemption? [...]
This agreement adds to economic policy fragmentation. It recognises that eurozone and non-eurozone countries might have different needs to secure financial stability. Much of the debate in the European Council has been whether Britain should have its own rule book: ground rules for the financial sector such as capital rules and procedures for bank resolution. In the end, the EU managed to keep up the appearance of a single EU-wide rule book with some special provisions for Britain.
But how could different regulatory regimes for the financial sector work for a monetary union whose main financial centre — London — is geographically outside its own borders? According to this text, the European Central Bank and other institutions involved in financial regulation should apply supervisory decisions “in a more uniform manner than corresponding rules to be applied by national authorities of member states that do not take part in the banking union”.
This is probably the most hilarious euphemism of the text. European banks are in a bad state. The banking union was supposed to be the answer, but is incomplete because it lacks a fiscal support and joint deposit insurance.
Britain is not part of it but it is part of the EU’s single market for financial services. This exemption is hard to justify.
What about the social benefits, the big political issue in the UK? The provision that allows the UK government to restrict in-work benefits for non-British EU employees for a period of up to four years will make it marginally harder for some to move across borders. [...]
If the deal is implemented in full, it will end the idea of ever-closer union. And if the British vote to leave, the deal will become null and void. Britain would enter a long process negotiating its exit from the EU. I struggle to see any good outcomes.
Full article on Financial Times (subscription required)