Yesterday Scotland, tomorrow the EU? Are there lessons for the 'In' and 'Out' camps?

Staying or leaving?

If David Cameron wins the May election he has promised an In/Out EU referendum by 2017. Even if he does not it is still probable there will be one at some point. National referendums are rare in the UK so with the Scottish vote we have a rare glimpse of what the EU referendum campaigns could look like. What should the nascent In/Out camps take away from it?

In trying to understand the motivations of the Scottish voters Lord Ashcroft's poll, conducted after the vote, sheds some interesting light. Voters made up their minds late in the day - 52% of voters made their mind up this year with 18% in the last month. The main issues driving independence voters were disaffection from Westminster and concerns about the NHS. Uncertainties over the pound and pensions drove the No side. 70% of Yes voters said they agreed with "The principle that all decisions about Scotland should be taken in Scotland" while No voters also felt the risks of independence were to great and conflicted with their attachment to the UK.

So are these findings and the Yes/No campaign relevant to a UK referendum on EU membership? here are some key issues:

	Scottish Yes/No	EU In/Out
The need for a clearly thought out alternative to the status quo	The Scottish 'Yes' campaign came unstuck on some key elements of their proposition. Notably confusion over the £ and EU membership. The difficulty ‘Yes’ had with these key policies dogged their campaign	The nascent EU ‘Out’ campaign has a similar problem as there is no settled view. What relationship will the UK have with the EU after exit? Will it be the EEA, a new free trade agreement, what will access to the Single Market be etc and what are the political trade-offs.
Harnessing optimism	The 'Yes' campaign was good at harnessing the ‘future’ and ‘change’ as a campaign weapon. The ‘No’ side failed to put forward a comparable future vision for the UK focusing instead on the risks of independence leading them to be portrayed as ‘negative'.	It will be difficult for the ‘In’ campaign to portray an optimistic vision of an EU future, given the likelihood of ongoing problems in the Eurozone – it will probably stick to pointing out what it sees as the risks of leaving. It remains unclear whether the ‘Out’ campaign will be able to manage to transform itself from campaigning against the EU’s negative record to wholeheartedly putting forward its own positive vision.
Who leads the campaigns matters - can they claim to be the anti-establishment?	In Scotland the ‘Yes’ campaign was united, had message discipline and was led by the First Minister of Scotland. This gave it the credibility of office and the ability to set the scene while remaining an outsider/underdog in relation to Westminster at the same time. By contrast the ‘No’ campaign was cross-party, divided and although ‘backed’ by the UK government was simultaneously seen as 'the Establishment' while being in opposition in Scotland.	It is unclear who the ‘In’ and ‘Out campaigns will be led by. However, on the basis that David Cameron is content with his renegotiation, the ‘In’ will have the advantage of the head of government and all the main party leaders.This could leave the ‘Out’ campaign run by UKIP and a number of backbench MPs. Although the ‘Out’ side would have the advantage of being ‘anti-establishment’ there would be a large imbalance in credibility and official resources that could tell in the campaign.
Foreign interventions helpful / unhelpful?	The ‘Yes’ campaign had to endure a series of interventions against them from UK allies and others including the USA, Australia, Germany, Spain, NATO and the EU.	While foreign interventions in the EU referendum are inevitable some will be more effective than others. While UKIP will not lose any sleep over an admonition by Mr Juncker, Germany or France, they may suffer some damage if Commonwealth allies or the US express a desire for the UK to stay in the EU.
Business interventions - do they matter?	'Yes' had to put up with major Scottish and UK companies threatening to relocate out of Scotland in the event of independence. To counter it Yes managed to organise some pro-independence business voices but the overwhelming balance of the warnings weighed on the campaign.	‘Out’ like ‘Yes’ is likely to have to endure a slew of major companies questioning the case for exit, particularly larger businesses. This too will be countered by pro-exit business voices. Without the currency issue to worry about, the business question will be about what market access the UK would have to the single market (see alternative to the status quo section above).
Emotional appeal of staying / leaving?	While 'Yes' managed to mobilise significant emotional appeal for independence the residual emotional appeal of the United Kingdom was also considerable.	The emotional appeal of the EU institutions in the UK is close to zero. While it is clear that the emotional desire to leave the EU is felt strongly by confirmed 'Outists', it is less clear what role political identity will play among the undecideds.
Devo Max / EU Devo Max - key to the middle ground voter?	While the campaign started as a polarised Yes/No campaign it quickly switched in the last week into a No+Devo Max v. separation. This managed to win over some of the wavering middle ground to No. For that to work the credibility of the offer being delivered was key.	The In/Out campaign will start from the basis that ‘EU Devo-Max’ has either been achieved or has failed. This will have a huge repercussion on the campaign. If the negotiation is still on-going and is in the form of a last minute ‘EU Vow’ it is unlikely the credibility of those offering it will be enough to swing the result.
Turnout and the undecided voters - Age groups voting	The Yes/No campaign had a very high turnout and a high level of voters who made their mind up in the last month. Older people tended to support the UK and younger people independence. As turnout was universally high the normal higher turnout among older voters probably did not tell.	An In/Out referendum is likely to have a lower turnout and a higher level of undecideds, making the last month and weeks of the campaign key. Older voters are more likely to vote for 'Out' and younger for 'In'. However, with a lower turnout older voters are more likely to make their voice heard.
Wild card issues	The Yes/No campaign spent a lot of time discussing the supposed ‘privatisation’ of the NHS - a policy area already devolved to Edinburgh.	Immigration aside, the dry nature of EU policy could mean the In/Out campaign comes to focus on unpredictable issues.
Rogue polls - who might they help?	The close nature of the polls probably drove turnout and drove ‘shy unionists’ who may have taken the result for granted to vote.	Polling is also very likely to be a large driver of the 'In' / 'Out' campaigns but it is unclear who this might benefit.

Will there be a post-Juncker Brexit bounce?

The Mail on Sunday had the first poll (by Survation) following David Cameron’s summit defeat over Juncker’s appointment as European Commission President. The top line is that 47% of Britons want to leave the EU, with 39% in favour of staying in. Given the recent trend of polls finding majorities for 'In', this is quite a striking change.

However, a YouGov/Sunday Times poll (note that the fieldwork was conducted before the summit) showed attitudes to Brexit more or less unchanged, with 39% in favour of in, unchanged from a week ago, and only 37% in favour of out, actually down from 39% last week.

Other results form the Mail on Sunday poll would suggest that the Juncker episode has had a limited impact: 60% said Juncker's appointment would not change how they plan to vote in an In/Out referendum, while only 30% said it made it more likely they would vote to leave and 10% said they would be more likely to vote to remain.

Interestingly, the extent of German influence in the EU has not gone unnoticed. Asked who would have more influence over how the EU is run over the next few years, 50% said Angela Merkel, just 9% David Cameron, 11.5% Jean-Claude Juncker, and just 1.6% Francois Hollande.

It will be interesting to see further post-summit polls to see if the rise of the Brexit vote is an outlier or whether things have changed (even if only temporarily).

Where are the real fault lines in the EU?

Ipsos Mori has this week published an interesting poll on public attitudes* in ten EU member states. Across the ten countries as a whole relatively few people want to leave the EU outright (18% on average), but the single most popular option is staying in the EU but reducing its powers (34%).

Just over a third want to see either the EU’s powers strengthened further (19%), or even a long-term policy of working towards a single European government (18%) - click to enlarge the charts.

Broken down by country, the British (68%), along with the Swedes and Dutch (69% and 68% respectively) are most in favour of leaving or reducing the EU’s powers:

The research suggests that, on average, two in three (68%) think things across the EU are moving in the wrong direction. People from the Netherlands, Sweden, Belgium and Britain are in line with the average, but those in the Mediterranean countries are the most pessimistic.

France, is the most pessimistic of the countries polled, whch seems to have a lot to do with the state of the country's economy. People in France, Italy and Spain are all particularly negative about the EU’s impact on the economy (74%, 74%, and 68% respectively are critical), and many feel that their economy has been damaged by the demands of austerity (75%, 70%, and 75% respectively).

The UK political debate on Europe may be a few years ahead of many other countries (perhaps with the exception of the Netherlands), but at the level of the individual, there are many people disenchanted with the European project. Many countries are deeply split but, on average, there is clearly an appetitie for the EU to do less. Most interesting though is the striking fault line in the eurozone. Francois Hollande has had precious little influence on EU policy since his election as president, but the question is, how long before the French public's disenchantment is reperesented by its politicians?

If you think the UK is the awkward partner, imagine if French politicians actually started telling Chancellor Merkel what their people think about Europe.

* It should be noted that the poll is not representative of the entire electorate in Belgium, France, Great Britain, Germany, Hungary, Italy, Poland, Spain and Sweden (where 16-64 year olds were interviewed), while the Dutch panel is representative of voters. Why they chose not to poll people over 65 is unclear and in our view is likely to skew the results somewhat (in different directions for different countries).

New OE poll shows Merkel and Cameron should have plenty to talk about

We’ve put out a new poll this morning in conjunction with You Gov ahead of German Chancellor Angela Merkel’s visit to the UK tomorrow. The results make for some interesting reading and suggest there are plenty of areas of agreement between the Brits and the Germans. Whether this can translate into a new Anglo-German bargain and wider EU reform remains to be seen, but it provides a good basis for discussions.

The results suggest that Germans are split on the future development of the EU. While 38% say they’d like a more integrated Europe with more decisions taken at the European level, 31% say they’d like a less integrated Europe and 9% favour complete German withdrawal. 14% favour the status quo.

Among British respondents, a less integrated Europe with more decisions taken nationally or locally, is by far the most favoured option (37%). 24% want complete British withdrawal, 15% favour the status quo and only 10% would like more integration with more decisions taken at the European level. This illustrates that rather than a straight in or out choice, the British public has a clear desire for reform. It is now up to the UK Government to deliver a clear reform programme.

While more German than British respondents were sympathetic towards the prospect of more EU integration, a majority in both countries think that national parliaments rather than the European Parliament should be the ultimate check on new EU laws (see graph above, click to enlarge).

In the UK, 55% believe that every country’s national parliament should have the right to block new EU laws and 18% believe that a group of national parliaments working together should have the power to block EU laws – a total of 73%. In Germany, 36% favour a veto for the Bundestag over new EU laws and 22% are in favour of a group of national parliaments being able to block EU laws – a total of 58%. Only 8% of Britons and 21% of Germans think the European Parliament, rather than national parliaments, should have the right to block new EU laws.

 

Furthermore, in four out of six key policy areas – EU migrants’ access to benefits, police and criminal justice laws, employment laws and regional development subsidies – a majority in both countries said that decisions should be taken at the national rather than at the EU level (see table above).

 

Of the EU’s three flagship projects – the single market, enlargement and the euro – the single market was considered to be beneficial by the biggest share of voters in both countries. 52% of British voters said the single market is beneficial while 26% said it is not beneficial and 23% are undecided. 74% of German voters said it was beneficial, while 19% said it isn’t, and 8% said they don’t know.

Both British (55%) and German (48%) voters tend to view the impact of EU migrants on their country negatively. A smaller share of voters in both Britain (42%) and Germany (42%) said EU migrants negatively impacted on them personally, while a larger share in Germany (41%) than in Britain (30%) feel that EU migrants have a positive impact on them personally.

Plenty of scope for agreement then, but we’ll end on a note of caution. Merkel remains keen on a step by step approach and is somewhat hamstrung by her new coalition partners. Cameron will have to secure a much wider base for reform than just her, while she is also more likely to publicly back him if he has formed other alliances.

#DEvote? Majority of Germans want to restrict migration

The Swiss referendum #CHvote to cap the number of EU migrants has sparked strong reactions across Europe. But would other European people vote differently if they were to be asked?

An Infratest dimap poll for Deutsche Welle from Wednesday suggests that a relative majority of Germans would like to restrict immigration as well. 48% say they are in favour of capping migration, while 46% are not. A very close call.  Note though, that the question was about "immigration" in general rather than "EU migration".

When broken down by party affiliation breakdown, it's clear where these views are most concentrated: 84% of Alternative für Deutschland's  supporters say they want a cap on migration. 51% of Angela Merkel's CDU/CSU say the same. Meanwhile, the Greens are least keen, with only 29% supporting the cap.

Courtesy of Deutsche Welle

In France, the picture might be even more distinct. A TNS Sofres/Le Monde poll recently showed that 34% of French “agree with the ideas” of Marine Le Pen’s Front National. Greens MEP Danile Cohn-Bendit estimates that 60% of French would vote in favour of limiting immigration.

A revealing portrait of UK voters' scepticism about the EU

A cross-border poll by Opinium, due to be launched tomorrow, of voters in the UK, France, Germany and Poland, as well as British business executives, tells a familiar story about UK voters' attitudes to the EU: they feel the costs outweigh the benefits.

UK business respondents were more likely to say EU membership is a good thing (47% versus just 26% of UK adults generally) and that it has more benefits than drawbacks (40% saying more benefits versus 19% of UK adults). Although the picture is mixed. Business respondents were evenly split on whether to vote in or out in a referendum but 38% thought the UK economy would be better off if Britain left the EU versus 31% who said the economy would be worse off.

The pollsters note that, "While people in the UK see the benefits of some areas of EU membership (specifically the lack of customs duties or tariffs, easing restrictions for businesses, tourism and travel), these are all overshadowed by the overwhelming majority saying that EU membership has had a negative effect on immigration to the UK."

But perhaps the most striking comparison is how Brits and voters from the other countries polled emotionally or culturally identify with Europe. 50% of the British public feel the UK is "not European". In Germany the figure is just 11%:

This illustrates that, for the British public, the processes and mechanisms of the EU are as controversial as specific EU policies. This is why systemic change to the EU (such as an effective red card for national parliaments) is so important.

Despite these cultural differences, when asked how much or little EU integration they would like, the most popular option among voters in every country was: "Some matters are handled by the EU but countries are able to opt-out and use national vetoes to protect their interests":

In addition, all countries support the idea of different levels of EU membership "where there are policies that all countries have to be a part of (e.g. trade, the single market) but some which countries can opt-out of (e.g. criminal justice or Euro membership)." UK business respondents were particularly positive of this idea with 68% supportive of different levels of EU membership and just 12% opposed.

So there is support in the UK and some of the other key member states for a more flexible model of EU membership. However, the large number of 'don't knows' among UK voters and their emotional ambivalence about the European project would suggest that wining support for a new deal in a referendum won't be straightforward, particularly unless the reform is substantial.

Are the Irish more optimistic about an austerity cure for Europe than the Germans?

A new Gallup poll for Debating Europe has asked peple all over the EU, except Luxembourg for some reason, about their views on austerity.

Now, of course, 'austerity' is rather a nebulous concept, particularly as different member states have had different experiences, while deficit cutting and structural reform all fall under the same term. Nevertheless, there are some interesting results.

The table above (click to enlarge) shows that across Europe as a whole, 51% said austerity is not working, while 34% said it is working but will take time, and 5% were sure it is already working.

Clearly, there are differences across the member states. No surprises that Greeks (80%) and Cypriots (64%) are the most sceptical about the merits of austerity. Portugal and Spain are also towards the right hand, anti-austerity side of the scale.

But look at Ireland. According to this poll, more Irish respondents (53%) think that austerity is working than Germans (42%), Finns (40%), or Dutch (39%)  - whose governments are considered to be the eurozone's most hawkish.

It is also striking that people from the new member states in central and eastern Europe, albeit outside the eurozone, have the most trust in austerity policies. The Baltics (Latvia, Lithuania and Estonia) in particular were subjected to significant austerity in the aftermath of the financial crisis yet many in these countries still support such an approach.

It is not clear what exlpains Irish optimism about austerity. It is likely to be a mixture of the fact that, so far, the Irish economy has made relatively good progress (although fears about the banks and property market still remain) and a general cultural disposition - as we noted in a paper last year, of all the struggling eurozone countries Ireland has the economic and social setup and history most likely to fit with the austerity approach.

But taken as a whole, this poll highlights the political and social scale of the challenge the eurozone faces with its current policy approach, particularly among the populations of Southern Europe.

New OE/OEB poll: Significant support among German voters to slim down EU

There is no doubt that Germany is strongly wedded to the idea of ‘more Europe’ -- at least rhetorically. But when it is boiled down specific EU policies, as the new Open Europe, Open Europe Berlin and YouGov Deutschland poll shows, there is significant support amongst German voters to slim down the EU.

Key findings of our poll illustrate that the European Commission and the European Parliament are the least trusted of the 13 different national and European institutions tested. Only 33% and 30% of German voters trust the EP and EC respectively.

On the other hand, the highest ranking institution is the German Constitutional Court (trusted by a whopping 71% of Germans). Interestingly for Brussels, this is of course, the same Court which has been throwing up barriers to further eurozone integration based on its interpretation of the German Basic Law and the EU Treaties.

There is also significant support among German voters to devolve powers from the EU back to the member states: 50% agree that it’s a good idea, only 26% don’t. Similarly, 41% think that the EU should have less powers, 36% are content with the status quo – and only 23% think the EU should have more powers.

Moreover, a majority of Germans want less Brussels involvement in at least eight policy areas:

When it comes to the question of Britain in the EU, the Germans overwhelmingly want to keep Britain inside.  63% think the UK and Germany could be strong allies in reforming the EU.

  
France is by-and-far still seen as Germany’s most important ally in Europe. It is ranked first by 61% of respondents, being followed by Britain on 19%. However, David Cameron inspires more trust among Germans (ranked first by 30% of respondents) than French President Francois Hollande (ranked first by 26% of respondents.)

Germany is a conflicted country when it comes to Europe – while it is ‘pro Europe’ in temperament,  when it comes to the actual policies, German support for 'more Europe' is heavily caveated.

New Open Europe/ComRes poll: British voters want changed relationship with EU rather than outright withdrawal

There has been a lot of debate recently about what the UK public really want in terms of the UK’s relationship with the EU. In an attempt to shed some further light on this Open Europe has today released a new poll conducted by ComRes.

The results show that among those certain to vote in next year’s European elections, UKIP would come first overall with 27%, closely followed by Labour on 23%. The Conservatives would come third with 21%. Two-fifths (39%) of Conservative voters from 2010 would vote UKIP in a European election if it were held tomorrow – this remains a major problem for the Conservatives.

However, paradoxically, there’s substantial support for David Cameron’s EU policy. If a referendum on Britain’s membership of the EU were held now, 37% say that they would vote to remain in the EU compared to 41% that say they would vote to leave. But, if there was a significant return of powers to Westminster followed by a referendum, 47% would vote to stay in the European Union, including one in five (20%) voters who say that they would vote UKIP in a UK General Election. Only one third of all voters (32%) would still vote to leave.

Of the individual party leaders, the public still has the most faith in David Cameron to negotiate a better deal for the UK in EU – though it’s clear that there’s a high degree of scepticism about whether a new deal can be delivered by anyone. In order address this 'credibility deficit', Cameron must start to press ahead with substantial reforms now.

 

In general, one thing is clear. That is the desire for a wider choice between simply In or Out. When asked to choose between different possible relationships that Britain could have with the EU, the public’s preferred option is to remain a member of the EU, without the Euro as their currency, but with the significant return of EU powers to the UK (38%). Surprisingly for an anti-EU party, “only” 61% of UKIP voters said they favoured completely withdrawing from the EU, with 30% saying they would be content with “significant return of EU powers”. For every other main party, a slimmed down EU was the single most popular option, suggesting that Ed Millband and Nick Clegg risk ending up out of step with their own voters if they continue to sit on their hands.

Here are some other interesting findings from the poll:

- In a General Election, Labour would win 37% of votes, followed by the Conservatives on 26%, UKIP on 20% and the Liberal Democrats on 9%. Under current constituency boundaries, Labour would win a majority of 110 seats with the Conservatives losing 102 seats. UKIP would not win any seats.

- More than half (55%) of the British public think that the Government should prioritise allowing the UK to have its own immigration policy when seeking to reform Britain’s relationship with the EU. Other areas of priority include giving the UK Parliament more powers to block un-wanted EU laws (42%), reducing Britain’s contribution to the EU budget (36%) and allowing the UK to have control over police and criminal justice laws (32%).

- 38% support the Prime Minister’s policy of negotiating new EU membership terms for the UK and then having an in/out referendum versus 32% who oppose it because they think meaningful renegotiation is impossible or want to withdraw altogether. Only one in ten voters (11%) say they favour the status quo and fear Cameron’s strategy creates “uncertainty”. 68% of Conservative voters, a surprising half of Lib Dem voters (52%), 32% of Labour voters and 21% of UKIP voters support Cameron’s strategy.

- However, when asked the question differently, six in ten (60%) think that it is unlikely that the Government will be able to deliver the changes it wants in the UK’s relationship with the EU – showing that whilst there’s support for Cameron’s strategy in principle, there remains a ‘credibility deficit’ which he must seek to close by pressing ahead with substantial reforms now.

See here for our full briefing on the poll results.

What the Dutch elections could mean for Europe and the euro

We have today published our thoughts on what the 12 September Dutch elections are likely to mean for the future politics of the eurozone.

Although the EU-critical left-wing Socialist Party has had a strong election campaign, recent polls have seen a shift back towards the centre with the centre-left Social Democrats (PvdA) overtaking the Socialists (SP) to become the main challengers to Prime Minister Mark Rutte’s VVD party (centre-right).

According to the latest Ipsos politieke barometer (8 September) the VVD and PvdA are neck and neck on 35 seats each. The Socialists (21) and Geert Wilders’ PVV (19) are vying for third place, with the Christian democratic CDA (13), left-liberal D66 (11), the Christian Union (CU) (6) and GreenLeft (4) all expected to figure.




Therefore, the most likely outcome remains a centrist, pragmatic coalition, which clearly is the preferred option in Brussels and Berlin. The Dutch elections are therefore unlikely to radically change the immediate political dynamics of the eurozone crisis. The country is likely to continue to oppose more bailout cash for Greece or any topping up of the eurozone’s bailout funds and remain a steadfast supporter of austerity in the struggling eurozone economies.

In the medium to long term, however, the Netherlands could well be on the path to becoming a more assertive – and far more complicated – EU partner. With future decisions on potential eurozone debt pooling to come and the prospect of more EU powers over national budgets (including the Netherlands’), Dutch public opinion and the more or less EU-critical parties such as the Socialists and Geert Wilders' PVV are likely to shift the country in a more sceptical direction.

The traditional parties of the centre have also increasingly taken on aspects of Wilders’ narrative on Europe. Neither VVD nor the PvdA are uncritically in favour of everything European, with the VVD making several critical interventions: refusing a penny more to Greece, on the need to limit EU powers in some areas and reduce the EU budget. A huge question will be if these two parties will see an electoral advantage in becoming more EU-critical in light of more potential bailouts, a stalling economy and an ever vocal EU-critical fringe.

You can read the whole thing here.
 

What a difference the question makes

Today's YouGov/Sun poll provides fascinating reading.

When asked "Do you think David Cameron should or should not set out a timetable of what sort of powers he hopes to bring back from the EU and when he will be able to deliver on that?" 63% of voters said he should, 24% said he should not, and 13% were undecided.

On the question of a referendum, 67% support having a referendum on "Britain's relationship with Europe within the next few years", 19% do not and 14% don't know.

But here's the crucial thing: the potential referendum question. If voters are only given the choice between in or out, 48% would vote to leave, 31% to stay in, 4% would not vote and 17% said they were undecided.

However, when asked the following question, "Imagine the British Government under David Cameron renegotiated our relationship with Europe, said that Britain's interests were now protected and recommended that Britain remain a member of the European Union on the new terms. How would you then vote in a referendum on the issue?"

42% would vote to remain in the EU on the new terms, 34% would still vote to leave, 5% would not vote and 19% are undecided.

The evidence therefore suggests that an in/out referendum would deny a huge portion of the British people their preferred choice.

As we have long argued, an in/out referendum also does not provide an answer to the question "what type of relationship do you want with Europe?" In or Out there will still need to be negotiation because access to the EU market remains a must for the UK. Going for the 'Norwegian' option, for example, would basically be just as much inside the EU as the current arrangement (but without a say over the laws).

Incidentally, the Sun comes out backing renegotiation and a referendum now - hinting that, should this fail, the UK ought to leave altogether.

Clearly, there's momentum building for renegotiation.

Which candidate has the most to gain from France's downgrade?

The race to the Elysee took another turn on Friday when Standard & Poor’s downgraded French debt. The decision had been widely anticipated by the markets since December, when the ratings agency conducted a review of Eurozone finances. Although all three French parties called for reforms of the ratings agencies – Nicolas Sarkozy’s UMP called for central banks to establish rating criteria, while Socialist candidate Francois Hollande mooted the possibility of a European agency – some candidates reacted better to the downgrade than others.

However, what is the likely effect of the downgrade on the presidential race? A LH2 poll conducted on Friday and Saturday in partnership with Yahoo! and published on Sunday shows that, compared to a month ago, Sarkozy and Hollande saw their ratings slip while the Front National's Marine Le Pen saw her third-place position behind Hollande and Sarkozy boosted. Sarkozy's share of first round voting intentions fell to 23.5% from 26%, Hollande's fell to 30% from 31.5%, while Le Pen gained 3.5% points to 17%.

Le Pen – whom 26% of voters wish to see in the second round according to a separate TNF poll published Friday – used the announcement as an opportunity to justify her policies, which include a return to the franc and protectionist measures such as a 3% import tax to finance her proposed minimum wage and social spending increases. During a jubilant press conference at the weekend, she argued that S&P’s ruling was “validation of the analysis [she] had carried out for the last two years” and that Nicolas Sarkozy’s “boomerang of lies” would soon come flying back to hit him in the face.

Hollande was quick to blame Sarkozy’s economic record. During a conference in French Antilles on Saturday the Socialist candidate remarked that “it’s not France that was downgraded but a certain policy…a certain president”. But his pointedly delayed response to Moody’s decision to maintain its French AAA rating was seized upon by UMP officials as proof that he was rejoicing in France’s downgrade. “Is the Socialist Party more cheered up by bad news for France than good news?” asked the UMP secretary Jean-François Copé.

Hollande also appears aware of the limitations the new downgrade sets for his presidential programme, conceding at the weekend that “not everything will be possible” and his pledge to “re-enchant the French dream” at the beginning of his campaign has itself been downgraded to one of offering “lucid hope”. Hollande has announced that he will propose strong measures to combat France’s ailing economy by the end of the month, a move which commentators have – perhaps rather too quickly - likened to Sarkozy’s 2007 muscular campaign of economic reform.

Sarkozy was the candidate most exposed to the downgrade for obvious reasons. Having brought the question of the country’s debt rating to the forefront of the national consciousness during his campaign to reform pensions (justified on the basis that they would reduce public debt and therefore maintain France’s triple A) he had the most to lose. As he reportedly confided to allies in December, “si la France perd son triple A, je suis mort” (if France loses her triple A rating, I’m dead).

In a conference in Madrid yesterday, Sarkozy downplayed the relevance of the S&P judgment, refusing to answer journalists’ questions because “what happened Friday, is Friday”. Today Prime Minister François Fillon denounced the left’s “small media tsunami which was at times almost as indecent as it was irrelevant”. Sarkozy has instead preferred to focus on employment ahead of the election, organising a ‘social summit’ tomorrow, where he will unveil long-overdue plans to reform France’s labour market, less than one hundred days before the election.

Sarkozy looks like the biggest victim of the downgrade, but Francois Hollande shouldn’t count himself lucky just yet. The Socialist candidate has insisted that he – unlike Sarkozy - never pledged any specific debt rating for France (an admission of pessimism unlikely to win over many additional French voters one would suspect). His pledged reforms to be “tough on the dominance of finance, tough on growth policies, tough on new instruments…tough on tax” don’t appear to have convinced voters either. Le Pen should be able to benefit the most off the back of the downgrade, but her weak performance during a televised interview on Sunday exposed her shoddy grasp of basic macroeconomics (and maths) which has left her poll standing stagnate at 18% today.

In sum, none of the three leading candidates have been able to use the downgrade to their benefit just yet but the race still looks open with only three months before the polls start for real.

Business support for Cameron's EU veto loud and clear

Much was said about business' opinion of Cameron's EU veto in the immediate aftermath of this month's summit but, now that the dust has settled, the picture is starting to become much clearer.

Today, in a letter to the FT, orchestrated by Open Europe, 20 leading business figures express their support for Cameron's veto and his willingness to "stand up for an outward-looking and competitive Britain."

Here it is in full:

Sir, It is impossible to know just how European politics or economics will develop at this juncture. However, since the UK prime minister’s recent veto of a new European Union treaty, one major point of principle is clear: Britain does not want, or intend, to be dragged deeper into a more centralised and over-regulated EU with ambitions to become a political union.We therefore believe that David Cameron deserves the full support of the business community. On this occasion, he was seeking safeguards for the financial sector, still one of Britain’s biggest industries, employing more than 1m people and contributing more than £50bn in tax revenues, but the principle is applicable to many other sectors of our economy, including manufacturing, which employs more than 2.5m people.

Those who would portray Mr Cameron’s use of the veto as bad for jobs and growth or as leaving the UK “isolated” are mistaken. The real threat to employment is the euro crisis, which was unaffected by his veto and which the recent summit did little to address. Britain has great potential to compete across the globe, if freed from badly targeted and trade-hampering government intrusions, whether from London or Brussels. Irrespective of the fate of the euro or the ability of weakened southern European economies to prosper under severe austerity programmes, it is most welcome that the prime minister has shown himself willing to stand up for an outward-looking and competitive Britain.

Rodney Leach,

Chairman, Open Europe

Anthony Bamford,

Chairman, JCB

John Barton,

Chairman, Brit Insurance Holdings

Roger Bootle,

Economist, Capital Economics

Mark Darell-Brown,

Managing Partner, Brown Vanneck

Douglas Graham,

Chairman, Express & Star Midland News

Gerard Griffin,

Portfolio Manager, GLG Partners

Robert Hiscox,

Chairman, Hiscox Underwriting

John Hoerner,

Former Chief Executive, Tesco Clothing

Geoffrey Howe,

Chairman, Jardine Lloyd Thompson

Luke Johnson,

Chairman, Risk Capital Partners

Tim Martin,

Chairman, JD Wetherspoon

Nigel McNair Scott,

Finance Director, Helical Bar

David Ord,

Managing Director, Bristol Port Company

Neil Record,

Executive Chairman, Record Currency Management

Nigel Rich,

Chairman, Segro

Hugh Sloane,

Co-founder, Sloane Robinson

Brian Williamson,

Simon Wolfson,

Chief Executive, Next

Signed in a personal capacity

Meanwhile, an IoD poll has revealed that 77% of its members agree with the PM’s use of the veto, with only 19% disagreeing. The survey found that 63% of IoD members would like to see the UK in a looser relationship with the EU, including 42% who would like to see a repatriation of some powers.

Add to this our recent poll of financial services managers, before the summit, which showed that 69% supported the introduction of a British veto on EU financial rules even if it reduced access to the Single Market, and the picture is one of widespread business support not only for Cameron's veto but for a more liberal and competitive Europe.

TGI Freitag

At Open Europe, Friday afternoons, for some random reason, is German polling time (see here). This afternoon, we have good news for German Chancellor Angela Merkel: her tough approach in handling the eurocrisis is apparently paying off back home.

A poll published by ZDF today shows that, in line with Merkel's thinking, 79% of the German respondents said they are against the introduction of eurobonds. Only 15% said they are in favour of eurobonds.

In October 2011, when ZDF conducted the same survey, 46% of the respondents believed the Chancellor's management of the eurocrisis was rather poor. In today's survey however, only 29% said they believe Merkel is doing a bad job managing the eurozone crisis. While an overwhelming 63% said they think she's doing well. In contrast, in October's poll this was only 45%. That's a 20% increase in just over a month. We'd hazard a guess that its not just a coincidence that this rise has happened during a period where Merkel has become increasing outspoken against eurobonds and the ECB becoming a lender of last resort for sovereign states.

The German respondents were fairly split when it came to eurozone countries handing over more economic and financial control to the EU. 48% believed the EU should have more control over these policy areas while 29% wanted to keep the EU's influence as it is now. 15% felt the EU should have less to say about the eurozone members' economic and financial policy. Clearly a give and take here, with Germans keen to see other member states kept in line - adopting more "German budget rules - but concerned about their own sovereignty as well.

The results definitely give Merkel some food for thought over the weekend then, but mostly positive (especially given the recent press surrounding the handling of the crisis). To top it off the poll also reveals that, were elections for the German Bundestag to be held next Sunday, Merkel's union of CDU and CSU would receive 35% of all votes, leaving it the biggest party.

So, in case you were still confused, no prospect of eurobonds anytime soon. Merkel also seemingly scored a win over France on the role of the ECB yesterday and have now got the French, Italians, and possibly (but only possibly) Finnish and the Dutch on board for an EU treaty change.

Not a bad week for the embattled Chancellor considering.

Economic governance: a tale of two polls

A new poll published yesterday by the German Marshall Fund of the United States makes for interesting reading.

With a few exceptions, majorities in the eurozone countries said the euro has been a bad thing for their economy, including France (60%) and Germany (53%), but also Spain (53%) and Portugal (52%). Italians were divided on the benefits of the euro with 47% saying the euro has been good and 48% saying it has been bad for their economy. Only the Dutch (52%) and Slovaks (64%) had majorities saying the euro has been a good thing.

Unsurprisingly, a full 83% in the UK thought that using the euro would be a bad thing for the economy.

But perhaps just as interestingly, the poll found that a plurality of EU respondents (46%) believe that in dealing with the current economic crisis, each country’s national government should have primary responsibility. Roughly two-in-five EU respondents (39%) said that the EU should have primary responsibility for handling the current economic crisis.

Only in Germany did the majority (54%) agree that the EU should have the leading role in economic decision-making. The French were divided on the issue, with 47% saying the national government and 43% saying the EU should have the primary responsibility.

This certainly makes an interesting comparison with the Commission's recent claims that "75% of EU citizens want more European economic governance", based on a rather creative interpretation of its Eurobarometer survey, which we have debunked before. EUobserver notes that the results "sharply contradict" the European Commission's interpretation.

Respondents were only asked whether or not “a stronger coordination of economic and financial policies among all EU member states” would be effective to combat the ongoing crisis (see p. 38 here). The question didn’t even mention the role of the EU or the term “European economic governance”. The Commission got its 75 percent figure by adding up the respondents who thought that stronger coordination would be “very effective” (26 percent) and those who only thought it would be “fairly effective” (49 percent).

Herman Van Rompuy's taskforce clearly has a very difficult job on its hands if it's to convince people on the need for greater economic governance.