In the early hours of this morning, EU finance ministers reached a technical agreement on the plans for a single financial supervisor under the ECB.
This deal is pretty big, as it links to a number of key questions surrounding the future of the eurozone, including whether the permanent bailout fund (the ESM) can directly recapitalise banks. It was always going to have important implications for the UK, given the threat of eurozone caucusing - the 17 writing the rules for the 27 - in the European Banking Authority (EBA) and changes to EU financial regulation (as we discussed here).
The details on the deal are still emerging and we'll look at the ECB-side later (our assessment from last night still stands). But the Chancellor George Osborne stressed that the UK (along with Sweden and the Czech Republic who also decided not to join) got a “very good deal” and that the “single market was protected”. He would, wouldn't he, so what deal did the UK actually secure and how good is it?
Double simple majority within QMV – This means technical rules at the EBA will (as before) need to be approved under QMV. Additionally, within this vote, there must be a simple majority of ‘ins’ and a majority of ‘outs’. So say that no non-eurozone country will join the banking union (which is very unlikely), this means the UK along with 4 other ‘outs’ can block any regulations which they do not support.So a big question remains:
Revised voting rules once there are only four countries left: For the UK, there's one potential weakness, if the number of 'outs' gets below 4 then the rules will need to be reviewed - and could be completely rewritten. Currently only three countries have explicitly said they won't join: the UK, Sweden and the Czech Republic. If all remaining countries decide to join, then these rules could need to be changed almost immediately. Here's a concern: the EBA regulation is decided by QMV, the ECB regulation by unanimity. Once the UK has agreed to the ECB regulation, it loses much of its leverage. The concern is that at a later date, the double majority principle is watered down using QMV, meaning that the UK gets stuffed anyway. Also, remember, MEPs must also approve this deal. Any changes made by the EP would also be subject to QMV approval. However, as a further guarantee, there seems to a provision making clear that the revised voting modalities will need political approval at the European Council (where unanimity applies). This is not a legal protection but a political one, so not completely watertight but clearly a useful addition.
Non-discriminatory clause – The separate proposal giving the ECB supervisory powers (see Article 1 here) also includes a provision meant to commit the ECB to not discriminate within financial regulation against a single or a group of countries.
Who are the ‘ins’ and who are the ‘outs’? Currently the UK, Sweden and the Czech Republic have said they definitely will not join the single supervisor, while all eurozone countries are obliged to. The other non-euro countries have suggested they will have a ‘close cooperation’ deal with the single supervisor (expect for Denmark) – this basically makes them count as ‘in’. For the UK point of view, 5 non-participants seem the ideal number as it will be much easier to block unwanted regulations, while 4 could trigger the review referred to above.
Will Croatia be an ‘in’ or ‘out’? This could alter the necessary majorities in EBA.On current count, this is a pretty good deal for the UK and it does establish that principle that the eurozone cannot run over none-eurozone countries.
8 comments:
revised voting modalities will need political approval at the European Council (where unanimity applies). This is not a legal protection but a political one, so not completely watertight but clearly a useful addition...
Don't like the sound of that. Anything that's not watertight leaks
Might be a victory, might be a draw. Either way, to win the campaign/war it is necessary to go on the offensive. Play for a draw or play for a win?
What we see now is a division within the EU, some want to give up the subsidiarity principle and others want to reintroduce and strengthen it. Formalising that would seem to be a good thing, who'd like to keep pretending that all countries in the EU want the same thing?
We could and should change the map (the treaties) to reflect the reality.
Btw, I've seen indications that mission creep and bureaucratic empire-building is gaining momentum:
1. EU institutions are taking on more tasks. People might think they are willing to undertake those tasks for free using their original budget.
but it is likely to be followed by
2. More money will, sooner or later, be asked for and the justification of the additional funding will be that more tasks are being attempted.
& I've got a suspicion that there might come a proposal to fund a bank resolution fund and the EBA by something that will look very much like a tax but have another name (levy, fee or?) -> Tax the profit of banks and it will be a tax on anyone using a bank -> EU will have effectively direct taxation of national economies to fund EBA (and why stop there?) and a resolution fund
At the end of the day, the simple truth is that no UK government has the right to trade away or otherwise imperil the UK's sovereignty, as is happening now with this banking oversight scam and with the EUSSR generally.
The people of the UK will eventually rise up and hold these traitors to account.
In fact, they're already starting to do that.
There's a temporary feel to all of this. We end up semi-detached to a corpse which by definition is going nowhere. The whole thing is a bodged temporary truce!
The Eurozone countries are making no attempt to face the crucial fact that a single currency cannot encompass the southern countries in the same economy as the northern ones. The whole inflexibility can only mean permanent servitude and impoverishment for half the population of the EU. It's criminal.
WHY does Open Europe continue to offer support - albeit critical support - to such a monstrous set-up. It is enslavement
Neither a leap forward towards a banking and fiscal union, nor a triumph for Britain. There will probably never be a viable agreement between Eurozone countries, France and Germany are at opposite ends. The French opinion is that the Germans will pay for everything. The German idea is to pay as much as their tax payers will let them; but no more. The only triumph for Britain is when we get out from the cancerous tendrils which will not stop coming from Brussels.
You said it - "the UK gets stuffed anyway" That pretty much sums up the whole thing, the rest of the article is therefore irrelevant - like reading tomorrow's dinner menu and concert programme on the Titanic.
I remember an excellent American book on running a business. Perhaps the best advice (after "never ask your bank manager for advice because by choosing to join a bank he disqualified himself (no, I did not make that up) was this:
If when you review a project you find that you need long and complex calculations to determine whether, if all goes well, you might end up with a modest profit - abandon it and switch to something that back of the envelope estimates confirm will make good profits even if things go less well than hoped.
Pretty much sums up staying in the EU, or leaving, doesn't it?
Basically the UK needs to be able to exercise a national veto over everything to do with this; it is simply not good enough for the UK to be left buggering around trying to protect its national interests under one majority voting system or another. So, no, it's not a victory for the UK; it's a defeat which is being misrepresented as a victory by our useless generals, as will become ever more apparent over time.
Croatia just got junked by S&P and is the parasitic mood just like the entire neighborhood. This year the current government stated they are supportive of the BU.
Of course they are, the socialists.
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