Free movement: Why reforming rules on in-work benefits doesn't require treaty change

Following David Cameron's speech on immigration, much has been made of his comments that the package of measures he proposed to reform EU free movement would require treaty change.

In some cases, the speech was ambiguous about what exactly was being proposed. For example, did Cameron really say EU migrants will need a job offer before coming to the UK? This is important because it has legal implications regarding whether some, all, or none of the proposals require treaty change, changes to secondary EU legislation or simply changes to domestic law. Although, politics will of course also play a major part.

In addition, some have questioned whether the proposal, outlined by Professor Damian Chalmers and our Research Director Stephen Booth and adopted by Cameron, to limit EU migrants' access to in-work benefits for a certain period of years could be achieved without treaty change, as the authors claim.

Today we have published  Chalmers' and Booth's assessment of the legal implications of the measures proposed in the Prime Minister's speech and a restatement of the case for why access to in-work benefits can be restricted via amendments to EU legislation rather than a treaty change.

Safe to say much of this is legally complex, but below is a summary of a summary of a longer legal note by Professor Damian Chalmers, which you can read in full here.

----------------------------------------------------------------------------------------

David Cameron's speech can be divided into four broad types of demand:

1. Four-year restriction on EU migrants’ access to in-work and child benefits

David Cameron mentioned two proposed reforms:

a) “once they are in work, they won’t get benefits or social housing from Britain unless they have been here for at least four years.”

This could be achieved via amendments to EU legislation: This is the most legally complex of the proposals but we argue that it does not require Treaty change for two reasons. Firstly, access to in-work benefits is currently granted in EU law by virtue of a piece of secondary legislation, rather than by the Treaty article on free movement of workers. Secondly, the Treaties grant considerable discretion to the EU legislature (the Council of Ministers and the European Parliament) to place restrictions on access to such benefits provided that the legislation facilitates free movement more generally (which the relevant Directive would continue to do), the restrictions are based on objective criteria and are not disproportionate to the objectives they pursue.

b) “If their child is living abroad, then there should be no child benefit or child tax credit at all no matter how long they have worked in the UK and no matter how much tax they have paid.”

Depending on what is sought this could be achieved under domestic law or amendments to EU legislation but if the objective is a hard and fast residence requirement this could be achieved via amendments to EU legislation rather than Treaty change.

2. Tighter restrictions on EU jobseekers

David Cameron mentioned two proposed reforms:

a) “We want EU jobseekers to have a job offer before they come here and to stop UK taxpayers having to support them if they don't.”

This depends on exactly what is proposed. If he meant that any EU citizen must have a job offer before they can come into the UK, this would certainly require Treaty change.

However, read in combination with the pledge to “stop UK taxpayers having to support them”, the proposal is better interpreted as suggesting that no social benefits will be granted to jobseekers. EU law already establishes that jobseekers are not entitled to social assistance and therefore such a reform would not require changes to EU legislation.

b) “We also want to restrict the time that jobseekers can legally stay in this country. So if an EU jobseeker has not found work within six months, they will be required to leave.”

In principle, the UK can already do this under its domestic law. EU law only grants a right of residence for more than three months to those who are employed, self-employed, and economically self-sufficient as well as their family members.

However, the ECJ has ruled that individuals cannot be expelled as long as they “can provide evidence that they are continuing to seek employment and that they have a genuine chance of being engaged”. While the onus is on the individual to prove this, clarifying what this condition means could be achieved by amending EU legislation. A hard and fast six month deadline would likely require Treaty change.

3. Abuse of free movement

David Cameron mentioned two proposed reforms:

a) “stronger powers to deport criminals and stop them coming back…and tougher and longer re-entry bans for all those who abuse free movement including beggars, rough sleepers, fraudsters and people who collude in sham marriages.”

Those deported at the time of conviction can be refused re-entry under existing EU law. Indeed, the German government has said it will use its domestic law to impose re-entry bans of five years for those who commit benefit fraud. The potential difficulty is for those EU citizens with family in the UK, who may be able to appeal deportation under the rights to family life guaranteed by the European Convention on Human Rights.

In the case of significant criminal offences where the individual has served a long prison term, the deportation may be several years after the offence, and it is open to the individual to argue that they are a reformed character. This poses difficulties as the individual threat to public policy must be a present threat. Albeit this requirement is currently imposed by an EU Directive, we believe that, if the provision were repealed, there is a strong chance that the ECJ would reinstate it as a Treaty requirement.

b) “We must also deal with the extraordinary situation where it's easier for an EU citizen to bring a non-EU spouse to Britain, than it is for a British citizen to do the same. At the moment, if a British citizen wants to bring, say, a South American partner to the UK, then we ask for proof that they meet an income threshold and can speak English. But EU law means we cannot apply these tests to EU migrants.”

This would likely require Treaty change: There are a number of judgments where the ECJ has stated that refusing to grant a non-EU national family member residence would violate the Treaty because it would discourage the EU citizen from exercising their rights to free movement.

Alternatively, it would be possible for new EU legislation to harmonise requirements on family reunification between EU citizens and non-EU nationals, so that the latter could only join the EU citizen in another member state if they meet certain requirements. However, this would entail harmonisation in an area (non-EU migration) where successive UK Governments have sought to limit the EU’s influence. Concern to prevent marriages to citizens from other member states being used as a vehicle for marriages of convenience can be addressed through tightening up existing EU legislation.

4. Tighter restrictions on migration from new EU member states

David Cameron proposed:

“So we will insist that when new countries are admitted to the EU in the future, free movement will not apply to those new members until their economies have converged much more closely with existing Member States.”

The UK could use its existing veto over new countries joining the EU to insist on these terms.

Six arguments Cameron can make to help reconcile Warsaw to his proposals for reforming EU free movement

Polish Europe Minister Rafał Trzaskowski's comments on Monday's Newsnight, where he said David Cameron’s plans to stop EU migrants from claiming benefits for the first four years after they arrive in Britain would be a "red line" for Warsaw, were widely cited in the UK media, much like Polish Ambassador Witold Sobkow's response to our initial report which heavily influenced Cameron's immigration speech.

As expected all along, Poland will be the biggest single obstacle to the changes.

Some of the reluctance is understandable. Following Poland's accession into the EU after having spent too long on the wrong side of Europe's historic dividing lines, Poles understandably do not want to accept anything that smacks of 'second class' status within the EU. While many Poles may privately think the proposals are reasonable, they also expect their government to stand up for the interests of Poles abroad, and any Polish government will find this hard to sell domestically, including a Law and Justice-led one (the issue has already lead to interesting discussions within the ECR group).

So how should Cameron deal with this? Here are six arguments he can make:

1. These reforms are the best way to let free movement stand: Cameron defended the principle of free movement in his speech and he did not pledge to impose an 'emergency brake' or quotas despite substantial domestic pressure, as to his credit Trzaskowski recognised. This reform package will allow the UK to stay signed up to free movement rules - a key Polish objective.

2. The UK cannot become a contribution-based system overnight: We hear this argument a lot out of Warsaw: "If the UK is concerned that its welfare model is too open, it can re-design it to bring it into line with those on the continent - tomorrow if it so wished. It can be done unilaterally and has nothing to do with the EU."

There are several problems with this position. Re-organising the UK's entire welfare system would be an absolutely massive undertaking - politically, economically and administratively. It would basically involve re-writing the UK's entire postwar settlement. This may or may not be desirable, but it simply won't happen any time soon, especially as a result of EU pressure. For one, the UK public won't have it.

Cameron could even bat the ball back in Warsaw's court by arguing that "It would be super-easy for you to adopt more ambitious emissions reductions. You just need to replace your dependence on coal with renewable energy, and you're in line with the rest of the EU. It can be done unilaterally and has nothing to do with the EU."

3. The UK shouldn't have to choose between keeping its welfare model and staying in the EU: The logical extension of the argument above is that only a French or Germany style insurance system is compatible with EU membership. Clearly, giving the EU an effective veto over such a sensitive area is not politically sustainable - in addition to being awfully discriminatory against the UK. Changing the rules around in-work benefits on the other hand is a pragmatic way to in effect bring the UK into line with continental systems without challenging the country's entire political order.

4. Poles and other EU migrants in the UK could be worse off under such a system: Ironically, if the UK were to adopt a continental model and scrap in-work benefits and tax credits for low-wage earners entirely, it would hit EU migrants in the UK much harder than the introduction of a temporary qualification period as it would permanently reduce their income. Is this really a more desirable outcome from the perspective of the Polish government and other opponents of Cameron's proposals?

5. Workers on low wages do not contribute significantly to the welfare pot: While the vast majority of EU migrants come to the UK to work and make a positive contribution to the UK economy, as our research showed, workers on low-wages pay very little in income tax and national contributions due to the UK's generous tax free allowance (£10,000 per year and rising) and national insurance contributions threshold (£153 per week). This means that far from funding their own benefits, these workers, especially if they have dependent children, can actually be a net burden on the public purse. Furthermore, despite their misleading name, tax credits in the UK are a cash benefit funded via general public spending and are not correlated to individuals' tax payments.

6. The principle enjoys widespread public support across the EU: The basic principle of establishing a link between contributions and right to access benefits enjoys wide-spread support in other EU member states as the YouGov polling below demonstrates:


Finally, tone is also vital. Cameron made a big mistake by singling out Poles earlier this year leading to the deterioration in relations as revealed in the leaked Wprost tapes, a mistake which he avoided making again in his immigration speech last week. The rules will apply to everyone from the rest of the EU and not one particular group or country. 

Did David Cameron really say EU migrants will need a job offer before coming to UK?

The dust has settled somewhat after Cameron’s much-anticipated immigration speech.

As we set out here, we welcomed the balance the Prime Minister struck and were particularly pleased that he co-opted our proposal to let the principle of free movement stand, while limiting access to in-work benefits until after a certain period working in the UK.

However, there is one particular passage that has caused some confusion, which is the following:

“…Second, we want EU jobseekers to have a job offer before they come here and to stop UK taxpayers having to support them if they don’t.”

This sounded like David Cameron wants to require EU migrants to have a job offer before they come to the UK. As some have pointed out this would definitely require a treaty change, since the ECJ has made it clear that the EU treaty articles on free movement must be interpreted as granting a right to move “freely within the territory of the other Member States and to stay there for the purposes of seeking employment.”

However, elsewhere in the speech, Cameron was much less categorical:

"So let’s be clear what all of these changes taken together will mean. EU migrants should have a job offer before they come here. UK taxpayers will not support them if they don’t. And once they are in work, they won’t get benefits or social housing from Britain unless they have been here for at least four years."

In combination with the "UK taxpayers will not support them" bit, the "should have a job offer" line is much more like an aspiration than a requirement. Indeed, this is the logic of the rest of the speech: Cameron would not have needed to pledge to ask unsuccessful jobseekers to leave after six months if they were to be denied entry in the first place.

Admittedly though, Cameron could have been much clearer on the specific point about the need for a job offer prior to entry. The ambiguity in his speech may risk creating false expectations.

We will publish a short briefing in the coming days looking at the various legal implications of the proposals set out in the speech.  David Cameron was clear that he thought the entire package would require treaty change. However, there are several elements to the speech and the proposals - changing the rules around in-work benefits only one. Here, we are of the view that ours and Professor Damian Chalmers' proposed changes to in-work benefits could be achieved via EU legislation rather than treaty change (we should point out that others disagree).

So stay tuned...

Why Cameron should stay clear of an 'emergency brake' on EU free movement

David Cameron's 'immigration speech' is expected to take place very soon.

As we have noted several times, one of the options that he potentially could go for is an "emergency brake" - the ability to impose temporary restrictions on the number of EU migrants who come to the UK.

We can see why this would be appealing politically - but we fear that if Cameron does announce something like this, without having a clear vision for how it would work exactly in practice, it could turn into another net immigration target. Sounding very good in an election manifesto - but ineffective in practice.

We've made this point a few times but to elaborate, here's why:

An emergency brake would be targeted at flows of new EU migrants not the existing stocks. UK Ministers have previously spoken about the need to manage “destabilising flows” – however, this remains a vague term that could mean many different things. Pinning down what would constitute a destabilising flow could prove incredibly tricky. For example, the graph below shows that current flows are not proportionately higher than previous flows and remain small as a share of the workforce (relevant for their impact on wages). In general, if the bar is too high, the mechanism will never be used. If too low, the brake would become a long-term rather than temporary measure – a de facto limit – and be tremendously hard to negotiate in Europe.

Source: ONS

It is very difficult to codify objective criteria for pulling an emergency brake – particularly any that apply to the UK’s current situation. The UK economy is booming, unemployment is falling, EU migrants have high employment rates and the UK takes less EU migrants per head than several other EU member states. All these most obvious criteria won't work for the UK. It's hard to claim to be the best performing economy in Europe and simultaneously claim to have a 'crisis' so bad that special treatment is required. It would also be impossible to predict all the future challenges migration could pose.

Source: Eurostat

Possibly the most compelling argument the UK could use at the current time is that certain local areas are facing high pressures on public services and housing supply. However, restricting EU migration to certain areas of the UK would be very difficult to administer in practice, while national restrictions would be a disproportionate response to local problems. The impact of migrants is also hard to discern in exact terms given other domestic policies regarding housing and local services.

What the UK would effectively be asking for is a ‘time out’ from EU migration – which is largely a result of understandable political pressures. However, this necessarily makes the criteria for pulling the ‘emergency brake’ politically arbitrary – and in turn tougher to negotiate in Europe. There's not a government in Europe, it now seems, that doesn't have a populist challenge. Should Spain be granted dispensation too?

It's also difficult to sell at home. There are precedents in EU law for restricting either free movement of persons or the other EU freedoms. So in that sense, an emergency brake wouldn't be completely out of character for the EU. All of the existing 'brakes', however, are policed by the European Commission and the European Court of Justice – would a domestic audience be happy with such an arrangement? Furthermore, at the very best the brake is likely to be temporary and may only delay flows rather than actually reduce them. It would have to be activated for a very long time in order for it to really reduce net flows in the long-term.

In addition, if ‘cost of living’ is to be cited as a reason for pulling the emergency brake, it means accepting that there is a ‘cost of living crisis’ – a move that would any UK Government would be politically loathed to make in public.

If someone can come up with a criteria for how to capture all the potential variables, then we're open to suggestions. But it would be foolish to announce such a big policy on such loose grounds. As we've argued repeatedly, writing the headline first, and the policy later, rarely works.

Will the new migration figures force the Tories to go one step further on free movement?

Where do migrants to the UK come from the EU or non EU?

David Cameron's hopes of getting back on the front foot on migration have been dealt a blow this morning - ONS figures show that immigration is up, and specifically immigration from the EU is up as well.

These figures are important for two reasons, firstly the timing - these figures come ahead of a much anticipated speech David Cameron is about to deliver on the whole subject. Secondly, the numbers when compared to two targets, firstly the Conservatives' 2010 manifesto migration target of "tens of thousands a year not hundreds of thousands." Secondly, the comparison to migration flows under Labour. Here are some of the headline figures:

• Total net long-term migration estimated to be 260,000 in the year ending June 2014 up from 182,000 in the previous 12 months.
• Total gross immigration of 583,000 in the year ending June 2014, a statistically significant increase from 502,000 in the previous 12 months.
• EU immigration up 45,000 and non-EU up 30,000.
• 32,000 Romanians and Bulgarians came to the UK up 11,000 and EU15 migration also up 10,000.
• Estimated employment of EU nationals resident in the UK was 16% higher in July to September 2014 compared to the same quarter in 2013.

Interestingly, while immigration is also up from the new EU member states, the longer term trend driving EU migration is that from the EU15.

So how will all this play out? Well as you can see from the ONS graph below EU migration is not the largest component in total UK migration. That non-EU migration also went up for the first time in a while is politically significant.

However, EU migration is a large portion. The fact it is not showing any sign of decreasing will fuel trust issues over both the EU and migration.

Politically, perhaps the most significant aspect here is that net migration to the UK is now higher than when Labour left office (but lower than the peak during the Labour government). Ukip and some media are already jumping on this. Ahead of the speech, there’s one key question:

Has the Tory leadership already ‘priced in’ today’s figures, or has this made a cap of some sort more likely? 

EU budget row: How much interest will the UK pay if it refuses to cough up?

300% interest - in the EU it is legal

As most of you will know by now, the European Commission has asked the UK to pay an extra £1.7bn surcharge into this year's EU budget - before December 1. David Cameron has said he won't pay anything "near that amount", which in turn has triggered an almighty stand-off with the Commission itself insisting that if the UK fails to pay, it'll be charged interest from day one.

There has been a lot of confusion as to how much interest the UK will be legally liable to pay if it follows through on David Cameron's threat to refuse to pay. The answer as always lies in an EU Regulation as we pointed out here.

So how much is it? The short answer is a lot. Let's say Cameron holds out for one month. He'll then owe the EU £3.5 million in addition to the original £1.7bn surcharge. If he holds out for six months, UK taxpayers are looking at an additional £39.1 million while one year will increase the bill to £89 million - the annual interest will then stand at 5.25% . If the debt is still outstanding after 10 years, the UK would owe an eye watering £5.5bn of interest on a £1.7bn debt - over 300% interest.

In other words, under EU rules, the penal rate is ever increasing.

This is how it is worked out. Firstly the regulation states an annual interest rate of 2% above base rates per year - making a current 2.5%. It's worth keeping in mind that this is much more than the UK pays itself to borrow (in maturities up to 12 years or so, see UK yield curve here). However there is a sting - a rising penal rate of 0.25% for each outstanding month, and the total interest is all paid at the higher rate. This quickly adds up as you can see below:

So if this drags on, it has the potential to really become messy. However, as with everything in the EU there is usually a political solution. The Netherlands and Italy are also upset at receiving demands while the calculations (particularly around the interaction with the UK rebate) and the EU amending budget that goes with it are still up for 'clarification' and/or amendment. As reports today also indicated, it seems likely the UK will be able to do a face saving deal to pay something more than zero and less than £1.7bn - but if not the implications are huge.

What are David Cameron's options on EU immigration?

Following reports that David Cameron is considering a new announcement on how he would renegotiate EU free movement, potentially considering an "emergency brake", we have set out in a short briefing what his potential options are.

Here are the key points:

The debate about internal EU migration has two dimensions. Though inter-linked they should be treated separately. “Fairness” – who can access what benefits and when; and “volume” – how many migrants come to the UK every year. David Cameron is reportedly considering moving from addressing fairness to making a demand to curb the numbers of EU migrants to the UK.

There is substantial support at the EU level to give national governments greater control over access to their welfare systems and doing so would not require treaty changes but a qualified majority vote among governments and the agreement of the European Parliament.

Any move to limit the numbers of EU migrants coming to the UK would most likely require treaty change (with the possible exception of an ‘emergency brake’) and therefore the unanimous agreement of other EU governments. It is currently unclear what exactly – if anything – Cameron might ask for on volume, but he may have three broad options, which in order of increasing difficulty to secure EU agreement are:

1. An ‘emergency brake’ triggering temporary controls on EU migration if the flow is considered ‘destabilising’, too large and/or concentrated;
2. Permanent quotas on EU migrants;
3. A points-based system, similar to that which exists for migrants from outside the EU, differentiating between “skilled” and “low-skilled” migrants.

There are a number of questions around how an ‘emergency brake’ could be organised practically, but if this is David Cameron’s top EU negotiating priority he may just achieve it, given that there are precedents for brakes in other areas in the EU treaties and there is increasing awareness across the Continent that public concern about free movement is contributing to the EU’s unpopularity.

Whatever the merits of the proposal, as a domestic political strategy, it is unclear whether an ‘emergency brake’ would be enough to see off UKIP – as Cameron could still be accused of failing to secure full control over Britain’s borders and migration policy – although it may reassure 'swing voters'. Therefore, Cameron risks spending a lot of political capital abroad for limited political return at home.

Securing either option 2 or 3 would be an extremely difficult task as it would involve fundamentally rewriting the EU treaties and unpicking one of the founding principles of EU membership. There is likely to be little or no political appetite for such a move among other EU countries. The Swiss experience shows that, even outside the EU, measures to limit EU migration could result in threats from Brussels of reduced trade access to EU markets.

This is not to say that EU rules on free movement can ever be changed, but rather that this is one area where Number 10 will find it hard to get away with creating the headline first, and the content later. Given the domestic sensitivity of the issue and how deeply it strikes at the heart of existing terms of EU membership, successfully negotiating change requires a well thought out plan that has domestic and European level buy-in.

The UK's Lord Hill is approved as EU financial services Commissioner - What next?

The final discussions and votes in the European Parliament's committees over the nominees for the new European Commission are currently taking place with most of the results already in.

As expected, Lord Hill has been approved as new EU Commissioner for financial services by 42 to 16 votes. The vote was on his actual portfolio, meaning that despite some speculation, he wasn't stripped of any of the responsibilities (i.e. ones relating to the banking union).

What does this mean for the UK? 

As we argued here, the appointment of Lord Hill as EU Commissioner for financial services is a victory for the UK - but not a make-or-break issue in the wider context of David Cameron's EU renegotiation strategy. The key negotiations will remain between national governments. We would also caution against drawing too much from Lord Hill's comments in front of the European Parliament - as we noted, this is ultimately an exercise in telling the European Parliament what they wanted to hear and trying to please everyone. The key will be to judge Lord Hill on what he does and how he works with the likes of Frans Timmermans in trying to change the culture of the Commission. Clearly, however, it will be important for Hill to not forget to mind public opinion at home as, for better or worse, he will be seen as some sort of a bellwether for the UK's approach.

What are the other verdicts of the day?

As for the other nominees, Finland's Jyrki Katainen was approved for his role as Vice-President for Jobs, Growth, Investment and Competitiveness by 98 to 52. A surprisingly close vote, possibly reflecting a weaker than expected performance in the hearings from someone of whom many had high expectations but also the fact that he failed to convince the left that he is no longer an arch proponent of the austerity approach.

In spite of all the controversies about his ties to the oil industry and his declaration of financial interests, Spain's candidate Miguel Arias Cañete has been approved as Energy Commissioner by 77 to 48 votes, but may face supervision by Commission Vice-President Frans Timmermans.

France's Pierre Moscovici also got the green light from MEPs as new Commissioner for Economic and Financial Affairs, Taxation and Customs Union by 31 to 15 votes. There may be some less than enthusiastic reactions in the German media tomorrow, so keep an eye out for our daily press summary. 

As expected, MEPs have rejected Slovenia's Alenka Bratušek by an overwhelming 112 to 13 votes. Bratušek had been proposed as Vice-President for Energy Union, but has been judged 'not fit' to be a Commissioner, meaning that she will have to be replaced.

The vote on Valdis Dombrovskis will take place later tonight, but he's also expected to go through.

Therefore, Bratušek is the only real 'victim' of the hearings. In addition, MEPs have also demanded that the Hungarian nominee, Tibor Navracsics, be given a different portfolio. Navracsics had been proposed as Commissioner for Education, Culture, Youth and Citizenship.

What happens next?

• The priority will be to find a substitute for Bratušek. At the moment, it's unclear who will replace her, and how long the process will take. Slovenia had put forward four nominees. The list of names included another woman, centre-left MEP Tanja Fajon. However, Fajon may not be seen as senior enough for a vice-presidency. Furthermore, she comes from a different political group (the European Socialists and Democrats, S&D). Bratušek belongs to the liberal ALDE group, which is likely to demand that she be replaced with someone from the same political family. Over the past hour, the name of Violeta Bulc, currently serving as Slovenia's Deputy Prime Minister, has also emerged as a possible candidate to replace Bratušek.

• Once Slovenia puts forward a new candidate, and provided that he/she gets the go-ahead from the European Parliament, there are broadly three possible scenarios:   

1) Timmermans becomes Cañete's supervisor: It has been reported that Frans Timmermans could, in addition to his current portfolio, also become responsible for 'sustainable development'. This means he would de facto supervise Cañete, and would also probably involve scrapping the post of Vice-President for Energy Union - meaning that the new Slovenian nominee would be handed a 'lighter' portfolio. As per Navracsics, he could perhaps keep the Education portfolio while being stripped of the Culture and Citizenship briefs.

2) Mini-reshuffle: Some reports have also suggested that Slovakia’s Maroš Šefčovič could become the Vice-President for Energy Union. Navracsics would become Commissioner for Transport and Space, and the new Slovenian nominee would get the Education portfolio. An alternative could be to make Austria’s Johannes Hahn the Vice-President for Energy Union, with Navracsics becoming Enlargement Commissioner and the new Slovenian nominee again taking the Education portfolio.

3) Tweaking portfolios: Another solution would be to give Navracsics, as in the first scenario, a ‘downgraded’ portfolio (i.e. without the Culture and Citizenship briefs), and keeping the new Slovenian nominee as Vice-President for Energy Union. However, the concerns over the seniority of the person and the ability to provide oversight of Cañete would remain significant.

• The European Parliament's final vote on the whole Commission is scheduled for 22 October. It may be pushed back if finding a substitute for Bratušek takes too long, but that looks unlikely.

• The new Commission will enter office on 1 November.

Things are progressing in a broadly positive way for the UK and the wider EU reform agenda. However, whether the Commission will in the end deliver reform - and whether it can function well internally given the new structure - very much remains to be seen.

Boris is right to set out an ambitious EU reform agenda

As we noted in an earlier post, London Mayor Boris Johnson's intervention on the UK's future relationship with the EU set out a list of policy objectives that go well beyond what David Cameron has so far proposed. They noticeably set the bar higher for any successful renegotiation.

Boris also told the Evening Standard this week that the UK had to go into the negotiations prepared to be tough. "You don’t go in hard to the tackle you are never going to come out well. You've got to go in hard and low," he said. Judging by his past form, he means business:

Here are the key reforms that Boris outlined, which embellished on those contained in the report authored for him by his economic advisor Dr Gerard Lyons - a member of our Advisory Council. They are an excellent marker for the direction in which the EU needs to go and most of them are reforms we have ourselves proposed and promoted:

• Make progress on the single market in services: The report for the Mayor cites Open Europe's research which illustrates that an ambitious liberalisation of cross-border trade in services could boost EU GDP by 2.3%. This is in fact a call for free trade that could boost competitiveness across the EU - the UK should push this policy hard and, if others aren't willing to agree en masse, be prepared to lead a vanguard of countries who are.  
• Better protection for the City of London from intrusive financial services regulation: A long-standing concern for us. We have noted that, since the eurozone crisis, the EU's regulatory output in this area has become far more trade-restricting and items such as the FTT were outright hostile to the City of London. This ties into the eurozone/non-eurozone point below, and why mechanisms to ensure that the single market cannot be controlled by the eurozone-bloc are essential to the UK's interests.
• Reform the relationship between euro ins and outs: This is arguably the biggest strategic issue facing the UK in Europe - and the report goes into far more detail on this than Boris did in his speech. The UK will not be able to live within an EU dominated by the eurozone. The ad-hoc solution used in the European Banking Authority of so-called 'double majority voting', which we were the first to propose, illustrates that this can be addressed but how easily this model can be replicated elsewhere is debatable and other solutions will be needed.
• A 'red card' for national parliaments: Again, a policy we have long championed. This is something that has support in several member states and would if member states and the Commission are serious about respecting it, root EU policy making more firmly in the hands of those with most democratic legitimacy in Europe - national MPs. 
• Reform "if not abolition" of the CAP: Abolition of the CAP is clearly a tall order, but we have set out how agricultural policy could be radically reworked which would hugely reduce the budget required and make it more market-orientated. Another budget reform we would through into the mix, which Boris didn't mention, is the repatriation of regional funding to the richer member states
• A return to intergovernmental cooperation in justice and home affairs, outside the jurisdiction of the EU: We have long argued that the ECJ should not have jurisdiction over crime and policing law as it applies to the UK and that the UK should seek a return to intergovernmental cooperation that does not cede democratic control over such a sensitive area.
• Reforming social and employment law: Boris talked of minimising "the costs to all EU businesses", but also said that if this meant resurrecting the UK's social policy opt-out, "I don’t think it will be a bad thing." We have calculated that EU social law currently costs UK business and the public sector £8.6bn a year - a figure also cited by Boris in his speech - and while these costs would not magically disappear if this area was left to national governments, there would be far more flexibility to tailor rules to local needs and practises - i.e. the UK's flexible labour market.
• On free movement of people, Boris called for "managed migration": Here Boris went further than Gerard's report. Boris seems to be calling for the principle of free movement to be revisited. It's not entirely clear what he means but we have long argued that EU migration can provide benefits to the UK and EU economy but that reform is certainly needed to the rules around access benefits for EU migrants. This means far more discretion for national governments over who can access state welfare and public services and on what terms. However, we do think the principle of free movement of workers - as originally intended - should remain. 
• Halting 'ever closer union': Often dismissed as a symbolic change, in fact this is about changing the culture of the EU and the default position that centralisation is always good. It is about instilling the principle that not all member states want to head in the same direction and that powers should be able to move downwards from Brussels to national capitals.

This is a reform agenda that would indeed radically reform the EU and the UK's relationship with it. As we have noted elsewhere, if there is a referendum in 2017, the British public will be far better placed than in 1975 to decide if the change is enough to vote for and that  is why the stakes are now so high. As we also have noted, however, the big challenge will be the timetable. Will this be possible before 2017?

Annus horribilis? 2017 could become the EU’s most challenging year to date

We don’t want to be over-dramatic, but 2017 could shape up to be the toughest year for the EU in a very, very long time. Perhaps ever.

If David Cameron gets re-elected, there will be an In/Out EU referendum in the UK in 2017 (though it could perhaps be delayed). With the appointment of Jean-Claude Juncker as new European Commission President and the symbolic defeat that involved, the risk of Brexit is now arguably higher than ever. The UK could leave the EU in 2017.

At the same time, there’s a growing possibility that Front National leader Marine Le Pen – who’s said she expects “nothing from Europe apart from destruction” – could win the French Presidential election due in April/May 2017. According to a new IFOP poll for French weekly Marianne, Le Pen would finish ahead in the first round of the 2017 presidential election with 26% of votes – followed by former President Nicolas Sarkozy on 25%, and President François Hollande or Prime Minister Manuel Valls on 17%. This means Le Pen and Sarkozy would make it to the final run-off. Although, the chances of her winning the run-off are relatively slim, it is notable that her closest challenger could yet be drowned in a corruption investigation.

As we noted yesterday, Swiss voters will likely be asked to vote again on the country’s relationship with the EU “at the latest by the end of 2016, or the beginning of 2017,” according to Swiss President Didier Burkhalter. It could be a “take it or leave it” vote in response to Swiss voters' opposition to the current free movement arrangements and the EU’s refusal to budge on the issue. If the Swiss vote “leave it”, there will be a huge crisis between Switzerland and the EU.

This wouldn’t be pretty at all. Now, we still don’t see this triple-whammy as a central scenario, but it’s hard to find a more ample illustration of why the status quo in Europe is the biggest threat to its survival.

Get on with EU reform. Now.

Is Cameron the greatest pro-European of all EU heads of state and government?

As we've noted, the Juncker-hangover is already taking hold in parts of the German commentariat. In a hard-hitting piece, Lisa Nienhaus, the Economics Editor of Frankfurter Allgemeine Sonntagszeitung argues that the EU "needs more Cameron, not less".

"Hang on a minute, how exactly [was Cameron's opposition to Juncker] a mistake? He only said publicly what many think. Juncker may well be a jovial, cheerful bloke, but he is also an example of political mediocrity, who represents more of the same, a lack of ideas. Whoever wants to change Europe, and above all the opaque, hyper-bureaucratic European Commission, needs someone else in that post."

"Cameron did exactly the right thing. He did not only win the hearts of Brits but also of citizens in many other countries who worry about what will ultimately remain of the European Union, a bureaucratic entity that offers occupational therapy and valediction opportunities for veteran politicians. In this sense, Cameron is the greatest pro-European of all the heads of state and government."

She continues that Juncker did not enjoy a democratic mandate from the German people, and that Angela Merkel made a mistake by backing him:

"The Germans, for example, did not vote for the European People’s Party (of whom Juncker was the leading candidate) but the CDU. Juncker did not feature on the posters, it was Merkel. It is not the case that voters would have driven crazy if Merkel had ultimately arranged that someone else would have become the Commission President. In doing so, she would have shown that she takes this post seriously. Now she has only shown that she doesn't really care who takes this job."

As we have been arguing as well, Nienhaus adds that the European Parliament (EP) does not have more democratic legitimacy than the European Council, and the appointment of Juncker is effectively a power grab by the Parliament. She calls on Germans who share this view to support the UK:

"The heads of state and government are ultimately at least as democratically legitimised as the European Parliament. After all, they won national elections in their respective countries." 

"We can only hope that Angela Merkel does not take offence at [Cameron's] 'No’. We need the Brits in Europe, also for other reasons. The belief of the Brits that freedom is good for the economy, and that not everything has to be regulated by the state, is exactly that what the EU is currently missing."

Nienhaus concludes that the UK is vital for the future of the EU, and that the EU debate is missing some of the UK's beliefs:

"The suspicion among the Brits that the powers that have won want to initiate a redistribution of powers and favour a super-powerful state is widespread. That does not appeal to the liberal Brits. Those in Germany who share this view – and there are many – has to support the UK playing a greater role in the EU. We need more Cameron, not less."

Neinhaus's line is not universally accepted in Germany of course. Others have been sticking the boot into Cameron. Nonetheless, Berlin will be aware that last week’s EU summit is a foretaste of what life in the EU could be if the UK were to leave. Without Britain in the EU, Germany would face a bigger risk of being cornered by a block of Southern eurozone countries lead by Italy and France: something that is absolutely not in its long-term interests.