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McAlinden Research Partners | DIBS |
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Daily Intelligence Briefing for May 27, 2014
The world’s second largest election (after India’s recent polls) could lead to the EU’s biggest stress test yet: fixing its democratic deficit. For most of its history, the EU’s evolution has been carefully managed by Europe’s elites, creating new institutions whose electoral accountability often lagged the powers they exercised. That could be changing: populist parties, fresh from recent successes in national elections, posted surprisingly strong gains to claim a fourth of the seats in the EU’s parliament, through which 90% of all EU legislation now flows in one way or another. Coming from the left and the right, these national parties are far from cohesive at the EU level but can claim a mandate for change: most voters think the EU doesn’t understand their needs and most voters think there are too many immigrants. It’s easy to see what the EU’s policy agenda will look like.
While most Europeans still support the euro, it’s possible that the high-water mark for European integration has been reached. Indeed, France’s National Front leader likens the EU to the USSR and says it should be allowed to crumble. The leader of the UK Independence Party calls on his supporters to join the “People’s Army” and topple the establishment. Such attacks used to be on the fringe; they are now mainstream, and the traditional parties will certainly shift their policies accordingly to curtail the EU’s powers. It seems to be no happenstance that one country where populists fared relatively poorly was Italy, where the new prime minister is leading the campaign to roll back the EU’s austerity policies.
Against this shifting political backdrop, the ECB is preparing to adopt radical policies of its own to stave off a deflationary threat and make good on Mario Draghi’s vow to do “whatever it takes” to defend the euro, which could now include formal quantitative easing and possibly even negative interest rates on bank deposits. In the past several years, the EU has faced a series of financial and economic stress tests … so far with success. Now for the biggest stress test yet: the democratization of the EU’s political institutions.
Today’s Issue Cluster: EU Politics & Economics
- A quarter of the seats in the EU’s parliament were won by populist parties, displacing the three main parties
- The UKIP is the first third party to win any national election in the UK since 1906
- Most voters believe there are too many immigrants in the EU … 77% of UK voters think so
- Two third of French voters think their country is worse off than a year ago … a third of UK voters say the economy is better
- Sentiment toward the EU is up since 2008 but 2/3 of Europeans still say it doesn’t understand their needs
- France’s le Pen says the EU is now like the USSR and be left to crumble … the UK’s Farage calls for voters to join the “People’s Army” and topple the establishment
- The EU parliament costs more to run than for the UK, France, and Germany combined … 90% of all EU lawmaking goes through the EU parliament one way or another
- For the first time, the European Commission’s new president will be selected by the EU parliament in line with the elections rather than by the member states
- Ukraine’s new president says his priority is integrating with the EU but will talk with Russia
- Data integrity watch: Europe’s wealth gap might not be widening after all… Ditto for the US … although academic Piketty says “there’s no mistake or error” in his work
- The ECB prepares to go negative on interest rates
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