Rien à voir ici? Hollande says treaty change is "not the priority" for France, but...

David Cameron and François Hollande have just held their joint press conference following the Anglo-French defence summit in Oxfordshire. Predictably, though, most of the questions focused instead on Cameron's EU renegotiation strategy and the prospects of it being achieved by changes to the EU treaties.

Here's what stood out for us:

• Significantly, Cameron explicitly said that renegotiation of the UK's EU membership "will involve elements of treaty change". This is quite a rare admission, and is the most explicit he's been so far on the need to change the EU treaties. As The Times's Sam Coates flagged up, the Prime Minister has been categorical about EU treaty change once before, speaking of "the treaty change that I’ll be putting in place before the referendum", on the Andrew Marr Show earlier this year - although the question was specifically on EU migrants' access to benefits. 

• The Prime Minister also reiterated that "the eurozone needs change...It needs greater co-ordination, it needs those elements that make a single currency succeed. That's why in recent years we've already seen treaty changes."

• Hollande said that "France wants more coordination and integration in the eurozone", but treaty change "is not the priority" for the time being. Though this is what the headlines are likely to focus on, this is nothing new, nor surprising. It's been the French position for ages. However, Hollande didn't rule treaty change out. He said it wasn't "urgent" or "the priority". As we have argued from the beginning (see here, for instance), the timetable remains a weakness in Cameron's plan - not least because discussions on changing the EU treaties can drag on for years and the eurozone remains on an uncertain development path.

• The French President also stressed that major treaty changes (he mentioned the Maastricht Treaty as an example) would have to be put to a referendum in France - while for smaller ones parliamentary approval would be enough.

A couple of points are worth making. It is no secret that one of the reasons France is wary of changing the EU treaties is that referenda are not exactly easy to win (think of the one on the EU Constitution in 2005, but also the one on the Maastricht Treaty, both of which split the country and the political establishment).

This is true assuming that the new Treaty gives the EU more powers. But this is not what Cameron is aiming for. So it is not entirely clear that any UK-led changes would necessarily have to be put to a vote in France.

That said, though, the common wisdom on this point is that an EU treaty change would be part of a 'grand bargain' to strengthen economic coordination in the eurozone - meaning that the UK's new relationship with the EU would be negotiated alongside greater central controls in the euro area. This type of treaty change could clearly trigger a referendum in France (and elsewhere).

The question remains open. With Germany likely to keep pushing for an EU treaty change to complete the overhaul of the eurozone structures, we still think Hollande may have to face the issue sooner rather than later - with the question being what deal Berlin can broker.

And yet again, that brings us back to Angela Merkel.

From the archives: The story of the 3% deficit limit

Okay, we know this is not exactly breaking news (the original story is from September 2012), but it came to our attention again and we felt compelled to post on it.

Back in the heyday of the eurozone crisis, Le Parisien interviewed Guy Abeille (see picture), a senior official at the French Finance Ministry who is thought to have 'invented' the 3% deficit-to-GDP limit later enshrined in the EU treaties and the cornerstone of the famed Stability and Growth Pact.

And Monsieur Abeille made some rather extraordinary revelations:

We came up with this number in less than an hour. It was born on the corner of a table, without any theoretical reflection.

It was a night of May 1981. Pierre Bilger, the Budget Director at the time, summoned us. He told us: [French President François] Mitterrand want us to provide him quickly with an easy rule, that sounds as coming from an economist, and can be opposed to the ministers that walk into his office asking for money.

We needed something simple...We were going towards FF 100bn deficit. That represented a deficit of over 2% [of GDP]. 1%? We dropped that number, impossible to achieve. 2%? That put us under too much pressure. 3%? It's a good number, a number that has gone through the ages, it made one think of the Trinity.

Mitterrand wanted a rule, we gave him one. 

In other words, it seems the deficit rule that has made so many politicians lose sleep, especially in the eurozone periphery, was cooked up in less time than it takes to roast a chicken and wasn't based on any economic theory or even best practice.

We also can't help but be reminded of the famed response of  a senior Anglo Irish Bank member when asked how he came up with the original bailout figure for the bank (which proved far too low) - I "picked it out of my a*se". Quite. And it seems he wasn't the first either.

Beyond the simplifications, what is Margaret Thatcher's European legacy?

Margaret Thatcher is often labelled a 'eurosceptic' - a modern day British Boadicea ready to do battle against all things European. But she was also today described as a “a committed European” by none less than the arch-europhile President of the European Parliament, Martin Schultz. Another EU President (Jose Manuel Barroso) added with some circumspect that she was an “engaged player in the European Union”, “remembered for both her contributions to and her reserves about our common project.” Confused? Here she is in her own words:

On a European superstate:

Was it always "No, No, No" to the EU?

“The President of the Commission, Mr. Delors, said at a press conference the other day that he wanted the European Parliament to be the democratic body of the Community, he wanted the Commission to be the Executive and he wanted the Council of Ministers to be the Senate. No. No. No."

On upholding national democracy:

"What is the point of trying to get elected to Parliament only to hand over sterling and the powers of this House to Europe?” 

On the EU budget:

A strong voice on the EU budget

“there should be a cash refund of our money...I am only talking about our money, no-one else's…there should be a cash refund of our money to bring our receipts up to the average level of receipts in the Community.” 

On the Treaty of Maastricht:

“It is nonsense to describe Maastricht as if it were a technical adjustment to the Treaty of Rome. It expands from 11 to 20 the number of policy areas in which the unelected Commission in Brussels can have the sole right of initiative.”

On the single currency:

“I do not blame the Germans. They have managed the new currency in exactly the way we should have managed ours. They put their country first and in doing so showed up the impossibility of a single currency for a group of such divergent economies as those of Europe.”

On EU bureaucracy and CAP protectionism:

“...we were not prepared to reach agreement unless we had stabilisers that mainly involved price cuts…We were amazed when the French refused to confirm them and said... they must go to a meeting of Foreign Ministers. Now I did point out that we had all Foreign Ministers here...so that they could have agreed then. This obvious factor did not escape them; they merely refused to have it…Only a Frenchman could have done that. It is absolutely unbelievable.”

But, clearly, she was not hostile to European cooperation - and most certainly not against "more Europe" in the areas that really do count, such as boosting economic growth. She campaigned to keep the UK in the E.E.C in 1975, was in favour of and and a driver behind the Single European Act, which saw a quantum leap for the Single Market, and championed EU enlargement to take in former communist states in central and eastern Europe. She saw the economic benefits of the EU if separated from what she saw as the political costs of centralisation.

To this end in her famous Bruges Speech she set out a pragmatic vision - which, if you read the actual speech, can, at least in part, be seen as 'pro-European':

“Europe is not the creation of the Treaty of Rome. Nor is the European idea the property of any group or institution. We British are as much heirs to the legacy of European culture as any other nation. Our links to the rest of Europe, the continent of Europe, have been the dominant factor in our history…"

Concluding:

“Let Europe be a family of nations, understanding each other better, appreciating each other more, doing more together but relishing our national identity no less than our common European endeavour. Let us have a Europe which plays its full part in the wider world, which looks outward not inward, and which preserves that Atlantic community—that Europe on both sides of the Atlantic—which is our noblest inheritance and our greatest strength.” 

So, as PM, Margaret Thatcher was neither "pro" nor "anti" EU. She set out more clearly than any other recent Prime Minister her own vision for the EU. A vision as legitimate and authentic as that which ultimately prevailed for the eurozone. She was quite prepared to argue for EU integration when there was a real economic benefit to be had. She was however a "sceptic", in the true sense of the word, in that she was suspicious of the prospect of political and ideological ambition alone stamping out economic and democratic reality. In that sense, given recent developments in the eurozone she was perhaps ahead of her time.

Bruges: pro British and pro EU?

Do the Germans and French still believe in Europe?

The front page of today's Die Welt reads "Germans no longer believe in Europe". According to a TNS Emnid poll carried out in July in Germany, France and Poland on behalf of the Bertelsmann Foundation, support for the EU and the euro has hit an all-time low with 49% of Germans saying they believe they would personally be "better off" without the EU, with only 32% saying that they would be "worse off". By contrast only 34% of French and 28% of Poles said they would be better off without the EU.

The poll also found that 65% of Germans (and 36% of French) believed they would be better off had the euro not been introduced.  

While the gap between French and German public opinion reflected in the above poll is striking, it is not all good news from France as far as the European Commission is concerned. The front page of today's Le Figaro runs with the headline, "The French and Europe: The disenchantment" (although the French word désamour can also be used to describe someone 'falling out of love'). The paper reports on a "shocking" IFOP survey conducted twenty years after the Maastricht Treaty was signed - and the euro was officially created.

According to the poll, if a referendum on the Maastricht Treaty were held today, 64% of French would vote against it. Indeed, one could argue that the French were never hugely enthusiastic about the Maastricht Treaty - only 51% voted 'Yes' in the original referendum. But the finding remains very significant.

Furthermore, a large majority of French also think that the adoption of the euro has had a negative impact on the competitiveness of the French economy (61%), unemployment (63%) and price levels (89%). Interestingly, though, 65% of respondents are opposed to returning to the franc.

Furthermore, the survey also found that 60% of respondents are in favour of "less European integration" of budgetary and economic policies, while 56% consider it "unlikely" that, in the long term, EU member states will give up their sovereignty to establish a "single European state".

Another tough reality check for European Commission President José Manuel Barroso's recent calls for a "federation of nation states" in Europe. As we already noted last week (see here), public opinion across Europe does not really seem to be on the same wavelength...