11 Dec 2020: EU countries agree historic €1.8tn budget and recovery package

Leaders of Hungary and Poland drop vetoes on rule of law mechanism linked to bloc budget

Mateusz Morawiecki, left, prime minister of Poland, and Viktor Orban, PM of Hungary, at the EU leaders’ summit in Brussels on Thursday © Olivier Hoslet/POOL/EPA-EFE/Shutterstock

Michael Peel, Mehreen Khan and Sam Fleming in Brussels

 DECEMBER 11 2020

EU leaders have adopted a €1.8tn budget and landmark post-pandemic recovery package after Hungary and Poland dropped objections to a new mechanism tying payments to rule of law principles. 

 Charles Michel, European Council president, announced the deal on Thursday evening at a summit in Brussels, saying the accord meant the EU could now “start with the implementation and build back our economies”. 

 The agreement follows weeks of uncertainty, as the historic economic recovery package agreed by leaders in July was overshadowed by vetoes threatened by Budapest and Warsaw. It removes a key barrier to the implementation of the €750bn recovery fund, under which Brussels will gain unprecedented powers to borrow hundreds of billions on the markets and hand it out as budgetary support to member states.  

 The deal means the EU can now push forward legislation aimed at enacting the fund, which should start paying out to stricken member states in the second half of next year. About €390bn of this sum will be distributed in the form of grants, raised via issuance of EU debt by the commission, with the remainder coming in the form of loans to facilitate the recovery in member states.  

 It also paves the way for the enactment of the EU’s upcoming seven-year budget, which was also being blocked. The stand-off was sufficiently serious for the commission to have been examining alternative plans to push through the recovery fund without the participation of Poland and Hungary — a fallback option that would have sent a damaging signal about the bloc’s ability to unite behind a response to the crisis. 

 Recommended The Big Read EU identity crisis: Poland, Hungary and the fight over Brussels’ values 

 The budget deal paved the way for an agreement at the summit to ambitious reductions in EU carbon emissions. An agreement to target cuts of “at least 55 per cent” in emissions over the next decade was announced by Mr Michel on Friday morning, following all-night talks that were earlier held up by wrangling with Poland over the details of the carbon reduction plans. 

 Hungary and Poland were won over with a non-binding declaration designed to assure them they would not be singled out under the new rules, which allow EU funding to be held back when countries endanger the bloc’s budget by violating the rule of law. 

 The four-page “interpretative declaration” gives reassurances that the rule of law mechanism will apply only to the next EU budget — starting from 2021. It also gives the European Court of Justice a role in ruling on the legality of the tool, should it be challenged by a member state in court even before it is used.  

 The ECJ would have to deliver its judgment before the European Commission draws up guidelines on how to trigger the mechanism — a requirement that would be likely to delay any sanctions process. 

The question of when measures to curb budget funds can come into force is significant for Viktor Orban, Hungary’s prime minister, who faces national elections in 2022. 

 Vera Jourova, the commission vice-president in charge of transparency and values, welcomed the deal, saying it was “good news for the citizens and business of Europe who are all hit by the pandemic and its economic impact”. She added: “The union needs to be better equipped to deal with the consequences of rule of law deficiencies, in this case affecting the budget.” 

 Supporters of the rule of law compromise insist the EU has not capitulated to the demands of Warsaw and Budapest, since the text of the underlying proposed legislation remained unchanged. But the stand-off has highlighted a deep split within the bloc as critics decry what they see as a slide towards authoritarianism in Hungary, Poland and some other member states. 

 The European Parliament, which negotiated the draft rule of law mechanism with governments, earlier voiced its support for the compromise. Manfred Weber, leader of the parliament’s biggest centre-right group — the European People’s party — said the statement respected the “red lines” agreed between MEPs and governments in November. 

 Recommended Rachman Review podcast19 min listen EU at a turning point 

 “The statement is not legally binding but the text we agreed is legally binding,” said Mr Weber. “The legally binding mechanism is a huge success.” 

 Mark Rutte, prime minister of the Netherlands, backed the plan after warning there were “questions” that needed to be answered about when the mechanism could come into force. The Dutch parliament has pushed for a stringent mechanism to punish breaches of EU values and has called the draft agreement the “minimum” it can accept. 

 Angela Merkel, Germany’s chancellor, said as she arrived at the summit that finalising the accord and releasing the funds would be a “very important sign for the European Union’s ability to act”. Germany is the holder of the EU’s rotating presidency and took the lead in negotiating the compromise with Poland and Hungary.  

 Additional reporting from Guy Chazan in Berlin

https://www.ft.com/content/03d72613-1745-4520-9ba3-5a94c8a3963f

ALSO READ:

https://leavevote.blogspot.com/2021/04/27-mar-2021-german-court-halts.html

CNN: The EU struck a big rescue deal on Covid-19...

The EU struck a big rescue deal on Covid-19. But it might have dealt a blow to democracy

Analysis by Luke McGee, CNN

Updated 1606 GMT (0006 HKT) July 22, 2020

(CNN)Brussels began the week in celebratory mood, as member states of the European Union finally agreed how they would distribute around $2 trillion of funds across the bloc over the next seven years.

The package, agreed in the early hours of Tuesday morning after four days of talks, comprises the $1.3 trillion seven-year EU budget plus a special $858 billion emergency package. It's designed to help the bloc recover from the Covid-19 pandemic as one, rather than abandoning poorer countries to their fate as wealthier nations surged back.

Getting all 27 EU states onside for a controversial package over four days of hard negotiating was undoubtedly a huge success. But as the bubbles from the champagne breakfasts evaporate, it will become impossible to ignore the fact that the union has agreed a compromise today that could create massive headaches later.

In recent years, Europe has been forced to acknowledge that the union faces an existential crisis, as some member states backslide on democratic norms. The two most egregious offenders in the eyes of the EU are Hungary and Poland, who in recent years have restricted press freedoms, cracked down on critics, and eroded judicial independence.

EU leaders strike 'historic' $2 trillion deal to rebuild Europe's economy

The emergency fund, first proposed by French President Emmanuel Macron and German Chancellor Angela Merkel in May, had always been controversial, as the monies would be raised against mutualized EU debt then distributed as a mixture of loans and grants.

Despite the controversy, it was clear to most member states that some kind of EU-level Covid response was inevitable. This created the opportunity to use these funds as an incentive to pull nations like Poland and Hungary back from the brink.

The EU has historically struggled when it comes to bringing delinquent members to heel. The much-discussed Article 7 of the EU's Lisbon Treaty -- which provides a mechanism for sanctioning member states by revoking their voting rights -- has always been flawed. The process is cumbersome and ultimately requires unanimous action from all other member states to punish an offending one, which was never likely to happen. There have been active discussions in Brussels since 2018 to creating some kind of external mechanism outside of the treaty, to make the process more effective.

Netherlands' Prime Minister Mark Rutte, left, talks with Germany's Chancellor Angela Merkel, 

President of the European Commission Ursula von der Leyen and France's President 

Emmanuel Macron at the summit.

Tuesday's agreement refers to such a mechanism. But critics feel it does not go far enough: An earlier version of the agreement published on Monday evening contained stronger language than the final document. Instead of a direct, easy way to withhold funds from countries offending member states, officials in Brussels are left with a fudge, contestable and open to interpretation. The only clear line on rule of law in the final document reads: "The European Council underlines the importance of the protection of the Union's financial interests. The European Council underlines the importance of the respect of the rule of law."

Some felt the final text had been severely watered down. "The original text was much more promising. [But] it seems that the Hungarian government was in a very good negotiating position," says Petra Bard, Visiting Professor at the Central European University. "They wouldn't have minded the whole deal being delayed for another couple of months. That meant other member states had little choice but to agree this vaguer wording that can be interpreted in many different ways."

This result was probably always inevitable. This EU summit has been described as the most bitterly divided in recent memory.

French officials said that Macron "slammed his fist on the table" in anger (although the Elysée later tried to say it was "metaphorical"); Hungarian Prime Minister Viktor Orban claimed that his Dutch counterpart, Mark Rutte, hated him "because Hungary, in his opinion does not respect the rule of law, must be punished financially."

So, the Tuesday morning fudge didn't surprise Brussels observers. "The EU has always been reluctant to act when there is a democratic backslide," says Daniel Kelemen, Jean Monnet Chair in European Union Politics at Rutgers University. "They have previously hidden behind the fact that Article 7 doesn't work and that they don't have the right toolkit, so try and create new mechanisms. The problem with this new agreement is any mechanism Hungary and Poland will vote for will be so watered down and unenforceable in reality."

Hungary's Prime Minister Viktor Orban arrives at the EU summit in Brussels on Monday.

This could mean that in getting this initial agreement, the EU has put out one blazing house fire while overlooking embers further down the street.

"People often forget that the EU isn't a state in itself with its own powers to enforce laws. The EU's legal architecture holds the whole thing together in some respects. If member states ignore ECJ rulings, threaten judges who implement EU law, it doesn't just threaten democracy; it threatens undermining the whole union," says Keleman.

Ronan McCrea, professor of European Law at University College, London, agrees that this presents a fundamental threat to the integrity of the whole union. "The EU's bureaucracy is really small compared to that of a local English council. This means the EU relies on national judges and civil servants to implement EU law in their own countries."

Earlier this year, Poland passed legislation that permitted the government to discipline judges who made rulings that the government disagreed with. "In any European democracy, judicial independence is crucial. However, if judges fear they are going to be disciplined for ruling against their government, how can they independently stand by EU law," says McCrea.

Kelemen goes further: "If judges are in the pocket of the government, how can another EU state extradite a criminal to a fellow member state? They cannot guarantee that person will receive a fair trial, especially in countries where political dissent is being cracked down on."

While Hungary and Poland might provide much of the focus of concern, they are far from the only EU member states that have flouted some of the EU's core pinciples. And as Kelemen points out, "failing to address this kind of backslide encourages its spread." And the further it spreads, the more leaders who are happy to play loose with democracy end up in prominent positions.

However much leaders in Brussels were toasting European unity on Tuesday morning, it is simply a fact that leaders with these instincts are becoming more assertive at EU-level. And as Hungary proved, they are getting good at playing politics in Brussels.

"Their goal now is to wield influence within the EU while picking up EU money to run their regimes with it," says Kelemen. The bitter reality for those who most value the EU is that those who seek to twist its values no longer seek to run from it, but to run the show.

https://edition.cnn.com/2020/07/22/europe/eu-budget-coronavirus-rule-of-law-analysis-intl/index.html

A £1.6 TRILLION EU splurge. Bitter squabbling. I was Remain... but what a relief we're out!

For as long as I can remember, late night bust-ups have been par for the course at European Union meetings. 

Even so, this week’s Brussels summit to rescue the EU’s pandemic-blighted economy was in a class of its own. 

By DOMINIC SANDBROOK FOR THE DAILY MAIL

PUBLISHED: 22:00 BST, 21 July 2020 | UPDATED: 22:38 BST, 21 July 2020

For more than four days, the leaders of the 27 member states were locked in sweatsodden battle, while reports of table-thumping and shouting matches filtered through to the waiting media. 

At last, just after dawn yesterday, a visibly exhausted Charles Michel, President of the European Council , appeared before the cameras. 

 ‘We did it!’ he declared. ‘Europe is strong! Europe is united!’ Strong? United? 

Well, let’s see. To cut a long story short, on top of signing off on a new €1 trillion sevenyear budget, the EU eventually agreed to hand out an astonishing €390 billion in grants to recession-haunted countries such as Italy and Spain, as well as a further €360 billion in low-interest loans. 

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Just after dawn yesterday, a visibly exhausted Charles Michel (pictured with Ursula Von Der Leyen) appeared before the cameras. ‘We did it!’ he declared. ‘Europe is strong! Europe is united!’

Added together, that amounts to a €1.75 trillion (£1.6 trillion) splurge. Right on cue, pro-European commentators stepped forward to hail it as a landmark event, representing a gigantic step towards an integrated United States of Europe. 

One pro-European e­conomist, Anatole Kaletsky, even compared it to the moment in 1790 when the United States of America became a true political federation. 

Nice idea. But not, I think, remotely convincing. 

The real story of the EU summit was not the outcome: a classic fudge in which nobody got what they wanted. 

Nor was it even the agonising sluggishness of the process — such a contrast with Rishi Sunak’s decisive measures to prop up Britain’s economy. 

No, the most striking aspect was the astonishing bitterness with which the EU leaders argued into the small hours, exposing all too clearly the deep chasms beneath the facade of fraternal unity. 

The most obvious schism is between the rich countries of the North, who believe themselves champions of sound money and low debt, and the poorer nations of Mediterranean and Eastern Europe, who have long chafed at what they see as their economic subordination. 

Having suffered grievously during the coronavirus pandemic, Italy, Spain and Portugal asked for grants worth some €500 billion. 

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Spain's Prime Minister Pedro Sanchez (L), French President Emmanuel Macron (C) and German Chancellor Angela Merkel peered at documents in Brussels on Monday

But in their path stood the ‘frugal four’ — Sweden, Denmark, Austria and the Netherlands — who made it clear they were sick of bankrolling their poorer cousins. 

These are old arguments, recalling the furious rows over the bailouts for debt-crippled Greece and Ireland a decade ago. 

But rarely have they raged with such seething intensity. The Dutch prime minister, Mark Rutte, insisted that any rescue package should involve a commitment to the ‘rule of law’, which many commentators saw as a rebuke to Hungary’s authoritarian strongman Viktor Orban. 

Squaring up like a nightclub bouncer, Mr Orban demanded to know ‘the personal reason for the Dutch prime minister to hate me or Hungary’. 

Meanwhile France’s Emmanuel Macron accused Mr Rutte of behaving like a British prime minister, the worst possible insult in the Gallic lexicon. 

Mr Macron was on fighting form, reportedly thumping the table like an overwrought t­eenager. 

At one point he shouted at Austria’s chancellor, Sebastian Kurz, for leaving the room to make a phone call. 

‘You see?’ Mr Macron declared. ‘He doesn’t care!’ 

In fairness, it is easy to see why the French president was so agitated. He sees himself as the guardian of the European soul, yet his fellow leaders are manifestly more devoted to their own national interests. 

The Franco-German axis, on which European affairs have turned for the last half-­century, is in deep trouble. 

Economic stagnation, national populism, anxiety about immigration and the searing impact of the coronavirus pandemic have taken a heavy toll. 

So instead of falling dutifully behind Paris and Berlin, more and more European leaders prefer to line up with their likeminded neighbours, from the sound-money Scandinavians to the begging-bowl southerners. 

Even Italy, the EU’s third most populous country, is no longer a reliable FrancoGerman ally. 

A few weeks ago, Claudio Borghi, economic adviser to the largest Italian party, the populist League, tweeted a World War II poster of a grinning Nazi soldier with the slogan, ‘Germany really is your friend’. ‘Time passes,’ Mr Borghi wrote ominously. ‘But the t­actics are always the same.’ 

So much, then, for burying the hatreds of the past! The irony is that the EU elite have never talked more f­ervently about the virtues of their beloved ‘project’. 

Yesterday, even the shattered Mr Michel claimed that the summit had demonstrated ‘the magic of the European project’. 

What rubbish! To an outsider, as we British now are, it is blindingly obvious that European unity is little more than a pious fantasy. 

In many ways, as callous as it might sound, the coronavirus pandemic was a tremendous opportunity for the EU. 

This was a chance for it to prove its worth at a time of genuine, lifethreatening crisis. It was an opportunity to proclaim the virtues of Continental s­olidarity, and to show that federalism really is the future. 

But, of course, things didn’t turn out that way. 

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European Union nations leaders agreed on a budget and a recovery mechanism after meeting face-to-face for a fourth day to discuss plans to respond to the coronavirus pandemic and a new long-term EU budget

Right from the start, EU citizens looked to their national governments, not to Brussels. 

Each member state raced to adopt its own policies, secure its borders and even get hold of its own personal protective equipment. 

For the hardest-hit countries, such as Italy and Spain, the lack of solidarity was hard to take. 

Feelings ran so high that in April the European Commission president, Ursula von der Leyen, even offered a limp apology to the Italians, whose requests to their neighbours to send medical aid had gone unanswered. 

But the lack of solidarity was no fluke. The reality, which the federalist elite refuse to accept, is that most EU citizens still see themselves as members of a nation-state first and as Europeans second. 

At the height of the pandemic, for example, the Danes closed the famous Oresund Bridge to nearby Sweden, while the Danish police literally turned back Swedes trying to cross the straits by ferry. 

If, at a time of crisis, people as self-consciously progressive as the Danes and the Swedes insist on putting their national identity first, then how on earth can you expect, say, the Latvians, the Portuguese, the Hungarians or the Romanians to behave differently?  

All of this, I think, bodes very ill for the EU. The tensions between penny-pinching Dutchmen and bombastic Hungarians, parsimonious Danes and impecunious Greeks aren’t going to disappear. 

And if tempers are fraught now, just imagine the mood once unemployment has rocketed and a new wave of national populism has swept across southern and eastern Europe.

As the decade wears on and the inequalities yawn ever wider, resentment is bound to build, the fragile bonds of Continental unity fraying almost to nothingness. 

And although some commentators argue that the EU is bound to muddle through, it’s perfectly possible to imagine the whole ramshackle edifice falling apart. 

No multinational entity, after all, lasts for ever. 

Will Hungary still be there in ten years’ time? Will Poland? Or will one of the richer northern countries decide that it’s no longer worth it? 

As some readers will remember, I voted Remain four years ago. 

But do I wish our Prime Minister had been there in Brussels, arguing about ­Rotterdam’s customs revenue? 

Do I wish we were joining our Continental friends in their collective borrowing spree? Well, I think you can guess the answer.

https://www.dailymail.co.uk/debate/article-8546311/DOMINIC-SANDBROOK-1-6-TRILLION-EU-splurge-Remain-relief-out.html

Johnson vows ‘new deal’ to rebuild post-virus UK

Reprising spending pledges he made before December’s general election, the prime minister will announce the acceleration of £5bil (US$6.2bil) of investment in roads, schools and hospitals and promise to publish a strategy for further capital spending in the fall.

Wednesday, 01 Jul 2020

LONDON: Boris Johnson will commit to spending on infrastructure to rebuild the coronavirus-ravaged UK economy in a major policy speech and say that balancing the books must wait until recovery is secure.

Reprising spending pledges he made before December’s general election, the prime minister will announce the acceleration of £5bil (US$6.2bil) of investment in roads, schools and hospitals and promise to publish a strategy for further capital spending in the fall.

“We will build build build. Build back better, build back greener, build back faster and to do that at the pace that this moment requires, ” Johnson will say, according to extracts of the speech released by his office.

What is needed is “a new deal” and “a government that is powerful and determined and that puts its arms around people at a time of crisis, ” he will say.

Johnson won a commanding 80-seat Parliamentary majority by promising to “level-up” left behind parts of the UK with spending on infrastructure and skills, but his plans were blown off course as ministers battled the pandemic, which has killed 43,575 people and plunged the economy into recession.

As lockdown restrictions are lifted, he is seeking to regain the initiative and deliver on his pledges as the centerpiece of his rebuilding plans.

The prime minister, who has said he will not repeat the austerity policies his party imposed after the 2008 financial crisis, will compare his programme to President Franklin Delano Roosevelt’s “new deal, ” which used government spending to help the United States out of the Great Depression in the 1930s.

And he’s prepared to increase borrowing to make it happen. In a briefing note about the speech, Johnson’s office said decisions over increasing taxes or cutting services to pay for the debt will have to wait.

“While in the long-term the government must set a path to balance the books, the prime minister is clear that we will not do so at the expense of investing now in the productive potential of the economy, or at the expense of the resilience of the UK’s public services, ” it said.

With debt higher than GDP for the first time since 1963, Chancellor of the Exchequer Rishi Sunak will “provide an update” on the economy next week. The announcement angered the opposition Labour Party, which wants a full redrawing of the budget to focus on employment.

“Unemployment has climbed to its highest level in a generation, and our country is suffering the worst economic hit of all industrialized nations, ” Anneliese Dodds, Labour’s economy spokeswoman said in a statement.

“Instead of the Back-to-Work Budget our country needs focusing on one thing – jobs, jobs, jobs – the Chancellor will only be providing an ‘update’ on the economy.”

The £5bil Johnson will allocate to hospital maintenance, school repairs and road improvements is not new money and is a fraction of the infrastructure spending announced in March.

Then, Sunak committed to increase total infrastructure spending across the next five years by £100bil to a total of £600bil. While much of that investment was designed to help reduce the UK’s long standing regional inequalities in growth and productivity, there are questions over whether such spending is the best way to stimulate the economy’s recovery from coronavirus.

“Infrastructure spending can get the biggest bang for the buck over the longer term, if projects are chosen carefully and boost productivity, but it is hard to find a large number of worthwhile shovel-ready projects that can boost demand quickly in the short term, ” Julian Jessop, economics fellow at the IEA, said in an email Monday.

“There is also a risk that the government simply takes jobs away from other priority areas, such as house building.”

A delayed National Infrastructure Strategy, which was originally scheduled for March, will be published in the fall, Johnson’s office said. The document will outline plans for “core” services including roads, energy networks, rail, flood defenses and waste.

The economic impact of restrictions to control the virus has been unprecedented, shrinking the economy by 20% in April alone and leaving officials fretting over the long-term scarring effects of what could be the deepest recession in more than 300 years.

While the government’s furloughing plan has ensured the UK has so far avoided a wave of unemployment, data suggest the labor market is also weakening, and opposition parties have warned joblessness could soar to levels not seen since the 1980s unless support is extended beyond its scheduled end in October.

There was a reminder Monday that the UK’s path out of the crisis won’t necessarily be smooth when Leicester, a city in the English midlands, reimposed recently eased lockdown restrictions and closed schools amd non-essential shops after a spike in cases.

The British Chambers of Commerce welcomed Johnson’s infrastructure spending plans, though said he will need to move fast to achieve his goals.

“The infrastructure delivery plans announced by the prime minister are welcome, but they must take shape on the ground swiftly to give a real confidence boost, ” BCC Director General Adam Marshall said in a statement.

“In his first inaugural speech, Franklin Delano Roosevelt said, ‘We must act, and act quickly.’ The same holds true in Britain today.” — Bloomberg

https://www.thestar.com.my/business/business-news/2020/07/01/johnson-vows-new-deal-to-rebuild-post-virus-uk

https://www.klsescreener.com/v2/news/view/696415/johnson-vows-new-deal-to-rebuild-post-virus-uk

Absurd for Boris to compare to FDR’s New Deal his spending plans

Why it’s absurd for Boris Johnson to compare his spending plans to FDR’s New Deal

Johnson’s “infrastructure revolution” represents just 0.2 per cent of UK GDP; Roosevelt’s plan was 200 times more ambitious.

ECONOMY

By George Eaton
30 JUNE 2020

TOBY MELVILLE - WPA POOL/GETTY IMAGES.

Boris Johnson visits a science room under construction at Ealing Fields High School on June 29, 2020 in 
west London.

Boris Johnson is far from the first UK prime minister to claim the mantle of Franklin D Roosevelt’s New Deal (Tony Blair and Gordon Brown also paid homage to the Democrat president). And judging by some of the coverage of Johnson’s announcement, one might assume such rhetoric is justified. 

The front page of today’s Times hails a “spending spree” that is “as bold as Franklin D Roosevelt’s New Deal”. But Johnson’s promise of £5bn of accelerated capital spending on hospitals, schools, roads, rail, prisons, courts and high streets is less impressive than the government’s spin suggests. 

The total announced by the Prime Minister amounts to just 0.2 per cent of the UK’s 2019 GDP (£2.2trn). By comparison, FDR’s 1933-39 economic stimulus, which supported the US economy through the Great Depression, is estimated by economists Price Fishback and Valentina Kachanovskaya to have represented 40 per cent of the US’s 1929 (pre-depression) GDP. As a share of the economy, Johnson's spending plan is 200 times less ambitious than the New Deal. It is also far outweighed by Germany’s recently-announced €130bn stimulus package, which accounts for nearly 4 per cent of the country’s GDP.

“It sounds positively Rooseveltian,” Johnson will declare of his programme in a speech in the West Midlands today. “It sounds like a New Deal. All I can say is that if so, then that is how it is meant to sound and to be, because that is what the times demand. A government that is powerful and determined and that puts its arms around people at a time of crisis.”

Yet despite UK GDP having fallen by 25 per cent since the Covd-19 crisis began, Johnson’s announcement includes no new money. The apparently heady sum of £5bn has merely been brought forward from the £600bn previously promised by Chancellor Rishi Sunak (a budget due to be spent between now and the middle of 2025). 

The government’s refusal to genuinely emulate Roosevelt’s boldness is a missed opportunity. Though the UK’s national debt now stands at 100.9 per cent of GDP, the highest level since 1963, borrowing has rarely been cheaper. Indeed, such is the appetite for UK debt from investors that the government has sold bonds at negative interest rates. Investors are paying the British state to borrow money from them.

Before Covid-19 struck, the government had already committed to borrowing for investment, repudiating George Osborne’s past pursuit of a budget surplus. But current plans will do little to compensate for years, and even decades, of underinvestment (even after recent increases, UK government investment remains 0.5 percentage points below the advanced economy average of 3.4 per cent of GDP). 

Johnson’s “infrastructure revolution”, then, is nothing of the sort. But even if it were, it would not be the sole test of whether the government has abandoned Hooverite austerity in favour of Rooseveltian stimulus. As well as total investment, the key number to watch is day-to-day spending on public services. Last year, the Institute for Fiscal Studies warned that even by 2023-24, current spending on services outside of health would be almost 15 per cent lower than at the start of the 2010s. 

Austerity has inflicted profound damage on the UK’s social fabric. Rough sleeping in England has increased by 165 per cent since 2010;  life expectancy has stalled for the first time in more than 100 years; and the number of people in poverty in working families has reached a record high. To truly reverse austerity, the government will need to spend far more on the services that have been so neglected over the last decade. 

George Eaton is senior online editor of the New Statesman.

https://www.newstatesman.com/politics/economy/2020/06/why-it-s-absurd-boris-johnson-compare-his-spending-plans-fdr-s-new-deal

EU Budget Problems Highlight New Divisions

The recent EU Council meeting in Brussels has yet again highlighted the gap in the European Union left by ...

March 16, 2020
written by Robert Tyler

The recent EU Council meeting in Brussels has yet again highlighted the gap in the European Union left by the departure of the United Kingdom. In fact, it has highlighted two – the first being a fiscal gap that needs to be plugged and the second being a political hole.

The United Kingdom acted as the voice of reason within the European Council. Its strict and sensible approach when it came to the budget – paired with its pragmatic approach to spending on areas in which the EU can do good – meant that the budget usually reflected the broad needs of the European Union.

Smaller countries would often rally behind the UK as a means of getting what they wanted. For example, more fiscally conservative countries such as Denmark, Sweden and the Netherlands were happy to support proposals to limit budgetary growth. Countries such as Ireland and Poland were equally happy with the UK’s position when it came to agricultural subsidies.

Of course, the greatest contribution of the United Kingdom during its time in the European Union was its financial contribution. The UK as an EU member, even after considering the rebate, was the second largest net contributor to the EU budget. In many ways by acting as a harmonious bridge within the Union, the United Kingdom sealed its own fate when it came to leave.

One of the greatest criticisms levelled against continued British membership of the European Union was that the size of the financial contribution made by the UK was completely out of proportion – especially while the UK was undergoing its own internal process of austerity. Many, on both the left and the right of the political spectrum, saw the fact that the UK sent so much money to Brussels while restricting domestic expenditure as outrageous.

While working class people in the north of England were losing their jobs and watching their schools and hospitals being shut, the EU was spending money on frivolous cultural projects in remote regions of Europe. This is, of course, all an exaggeration – the reality is that it’s the same local governments that were shutting schools that would have applied for the EU grant to begin with – however it made an easy narrative to win a referendum on.

The same arguments are now starting to play out in other countries across the European Union who have, since Brexit, found themselves footing more of the bill. The Netherlands, Austria, Denmark and Sweden – the so called ‘Frugal Four’ – have coalesced around the need to shrink the EU budget, or at the very least improve its efficiency. A coalition of countries that continue to favour free trade, economic freedom and favour a more broadly sound classical liberal approach to finance.

On the other side of the continent are the Visegrad 4 countries – Poland, Hungary, Czech Republic and Slovakia – who have used the budget to try and push for an assurance that so called ‘cohesion funding’ continues – money that is used to try and raise all member states to a similar level of economic development.

All of this isn’t to say that the EU won’t reach a fair conclusion on the budget – but it does show the difficulties that have emerged as Europe becomes more and more divided, both politically and the renewal of geographic self-interest. When asked whether the Netherlands was the new UK, Prime Minister Mark Rutter responded “No – we are the Netherlands”. But the point still stands, someone will have to plug the fiscal conservative gap in the same way that someone will have to plug the financial gap.

BUDGET

ROBERT TYLER

Robert is a political strategist based in Brussels, supporting the conservative movement. He has a Master’s Degree in Security and Intelligence Studies, and a Bachelor’s Degree in Modern History and Politics.

https://conservatives.global/eu-budget-problems-highlight-new-divisions/