James Bevan: Gauging EU sentiment on the continent after Brexit vote
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When the Brexit vote took place, there was a broad expectation that there’d be similar votes across Europe, but that may be wrong. Thus we have the “before” and “after” polls of Danes in favour of holding a referendum on the country’s EU membership shifting from 41% (before) to 32% (after), whilst Austrians’ support for leaving the EU declined by 19 percentage points within one week of the vote. And the French now tend to favour staying in the EU, whereas they’ve historically been even more sceptical of the EU than the British. Even German Chancellor Angela Merkel’s approval ratings rose to a 10-month high of 59% following the vote.
There is the Italian referendum in October and Prime Minister Matteo Renzi has declared that he will resign if he loses the vote. But as Fiorangelo pointed out, the vote is not about whether to leave the EU but whether to pass a political reform that would reduce the powers of the Italian senate. Mr. Renzi and his supporters believe it will greatly streamline decision-making and enable economic reforms. Lawmakers have passed the measure already, but it is set to be put to a referendum because it did not get more than two-thirds of their votes.
At stake is not just Renzi’s job but the very stability of Italy’s political system, which potentially could fall apart if the vote is “no.” The anti-EU alternative Five Star political party would seek to capitalize on any such instability. Beppe Grillo, a blogger comedian and founder of Five Star, has promised to push for an Italian referendum to leave the Eurozone but he has recently taken a far more conciliatory tone (see 4th July Bloomberg article, which also reported that Italy’s constitution currently doesn’t allow for referendums to change international treaties).
With regard to France, last week, Prime Minister Manuel Valls, with the support of President François Hollande, invoked special constitutional powers to bypass the lower house of parliament’s second review of labour reform laws. The new laws allow employers to hire and fire more easily than before as well as to set the terms of employment, including hours, more freely. This is important because the current socialist regime was voted in by the French working class on the promise of not allowing austerity in France. But the current regime has changed its spots and every day there are clashes in Paris. This may help “Madame Frexit”, the name that Marine Le Pen has taken for herself, in the French presidential election next spring. She supports France’s leaving the EU and her prospects may hinge on how quickly the current establishment can prove that their reform measures will work to reduce stubbornly high unemployment, as Hollande and Valls expect.
In the Spanish vote that immediately followed the Brexit vote, the party of acting Prime Minister Mariano Rajoy won 33% of the vote, regaining seats in the deputy parliament that it had lost just six months before. At that time, the first general election was held, but the competing parties failed to form a government, so a second vote was held. Mr. Rajoy’s party, the Partido Popular, is pro-austerity, and after the Brexit results, Mr. Rajoy suggested that Britain’s surprising step in the unknown showed the need for Spanish voters to choose stability.
Looking ahead, on 2nd October, Hungary and Austria will hold votes which the FT describes as pitting “rightwing forces against EU institutions and mainstream politicians”. Neither is an exit vote, but both will reflect citizens’ regard for the EU. Austrians will vote in a repeat presidential election; the first Austrian vote favoured pro-EU leaders, but by a very narrow margin. Hungarians will vote on whether to relocate migrant asylum seekers to Hungary from elsewhere in the EU. Lots of Hungarians are pro-EU, because Hungary is highly dependent on the EU economy.
Meanwhile, EU leaders will meet to discuss the future of the EU on 22nd September. It will be interesting to see whether the outcome of that meeting affects the results of any of the upcoming votes.
James Bevan is chief investment officer of CCLA, specialist fund manager for charities and the public sector. CCLA launched The Public Sector Deposit Fund in 2011 to meet the needs of local authorities and other public sector organisations. You can follow James on twitter @jamesbevan_ccla
*CCLA is a supporter of Room151
