The Farage Paradox part II: Support for EU membership at highest level since 1991

Back in May, we pointed out the so-called 'Farage Paradox' - even as the party came first in the European elections in the UK and Farage himself was widely seen as having bested Nick Clegg in their TV debates, support for leaving the EU had fallen to its lowest level for a long time according to Ipsos-MORI with 37% in favour of Brexit and 54% in support of staying in.

A few months later and UKIP is still riding high in the polls with a victory in the Clacton by-election under its belt and with the Tories on the run in Rochester and Strood - amid all kinds of noise around EU migration. However, on the wider EU question, support for membership has climbed even higher - today's Ipsos-MORI poll has support for membership at 56% - its highest since 1991!! - with support for leaving on 36%.

It's not entirely easy to nail down the drivers behind the trend - even the UK's public defeat over the appointment of Jean-Claude Juncker as European Commission President hasn't reversed it but one possibility could be that as the prospect of exit becomes more real, especially in the wake of the Scottish referendum, people are more likely to go with the 'better the devil you know' option. Another explanation is that Farage is good at stirring up support in concentrated parts of the country, but his divisive rhetoric turns others off. A feel-good factor over the economy (through as we've argued before, this can cut both ways) combined with increased uncertainty around the world - making the status quo look safer and club membership more attractive - could be other reasons.

Either way, it shows that even as UKIP find a way of tapping into disenchantment with the EU and mainstream UK politics, they are failing to convince  people that they have the right remedies and this risks derailing the broader 'out campaign, as the pro-Bexit Tory MP Michael Fabricant has warned:

"The out team will be very different, with no leader who commands popular support. Before you can even make the case for Britain becoming a mid-Atlantic economic hub, freed from the shackles of Brussels diktats, the Eurosceptics will be all over the place. No clear leader, and angry looking grey men who have been arguing the toss on Europe for years, will fail to impress. Yes, Nigel Farage is clearly the most charismatic Eurosceptic in years, but does anyone really imagine Farage being the Alex Salmond of the out campaign? Would he be persuasive enough to seduce a nation?"

However, it is worth bearing in mind that other polls have slightly different outcomes. Today's YouGov poll for the Times' red box showed lower levels of support for EU membership - support for membership is roughly the same under their 'major changes' scenario as under Ipsos-Mori's status quo scenario (YouGov's status quo option assumes renegotiation was attempted but failed to secure even modest changes, so can't be directly compared with the Ipsos-MORI one).

This shows that even if some polls suggest a majority of Brits would vote to stay in no matter what, EU reform and renegotiation remains by far the best option for any UK government. 

As has been noted before, that's why some Better Off Outers are now starting to fear that long sought after In/Out referendum - in itself an ironic development. 

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).

The Farage Paradox: UKIP on the rise but so is public support for EU membership

Poll watchers in the last few years would have seen many polls showing a majority of Brits would vote 'out' in a referendum of the UK's membership of the EU. In the last few months this trend has been slowly reversing, and a new Ipsos-MORI poll out today shows that if a referendum were held right now, 54% would vote to stay in - the highest support for the EU for a few years - and 37% would vote to leave.

Why is this the case? The most obvious factor is the improving economic situation in both the UK and (most of) the eurozone. Another factor could be that as the EU debate has become more prominent, it has forced people to consider the issue and come down on one side or the other - it is notable that only 10% say they don't know how they would vote.

Likewise, the concerted focus on EU reform primarily by the Conservatives but also to a lesser extent by Labour and the Lib Dems may have reassured voters that the EU may be moving in the right direction. This has also involved much sharper and clearer communication by David Cameron of what kind of EU reforms he will prioritise, as well as high profile interventions by EU politicians calling on the UK to stay in and emphasising the UK's importance to the EU.

The irony is that the upswing in support is happening at exactly the same time that UKIP is riding high in the national polls and could well come first in next week's European elections, and UKIP leader Nigel Farage was widely seen as having beaten Nick Clegg in the EU debates. These figures lend credence to the theory put out by some including British Future's Sunder Katwala that while Farage is effective at maximising the UKIP vote, his message and rhetoric, including the overwhelmingly negative focus on immigration, is actually a turn-off for potential supporters of a UK exit (Douglas Carswell has also made this point).

Second Clegg/Farage debate highlights that the EU status quo is indefensible

The majority of the UK public was not represented at last night's debate

The second EU debate between Nick Clegg and Nigel Farage was an altogether more scrappy and bad-tempered affair with more personal attacks and fewer statbombs being thrown about. 

The polls hand Farage a clear victory - 68%/27% in the Sun/YouGov poll and 69%/31% in the Guardian/ICM poll - a more comprehensive margin than last week.

So clearly a bad evening for Nick Clegg, although the calculations of the Lib Dem strategists seems to be that the combination of the additional exposure and full-throated defence of the EU will allow the party to pick up some extra votes in May's European elections.

However, it remains to be seen what the longer term repercussions of the debates will be. It was striking that, over the course of two hours, Clegg had virtually nothing to say about the EU's flaws and failings and what reforms he'd like to see. Indeed, in response to a question from the audience about how the EU would look in 10 years' time, he said that it would look "quite similar to what it is now". Given what is happening in the eurozone, which will indirectly also affect the UK's position in the EU (something Clegg has himself mentioned on previous occasions), this is simply not credible. It also completely dismisses the public appetite for EU reform.

What is interesting is that, despite Farage's overwhelming victory in the debate, the Sun/YouGov before/after poll showed that public opinion on the In/Out question remained pretty finely balanced. Before the debate there was a small majority in favour of staying in the EU - 48% compared with 42% in favour of leaving - after the debate this was reversed slightly with 45% in favour of staying in and 48% in favour of leaving.

Polling has consistently shown that when the public are offered options that go beyond the binary in/out question, the majority of the public fall between the Clegg and Farage positions, with a far larger constituency in favour of staying in a reformed/slimmed down EU.

People hold different views about how they would like to see the European Union develop. Which of these statements comes closest to your view? (click to enlarge)

Source: YouGov poll for Open Europe, February 2014

Clegg's decision to talk only to the limited number of 'in no matter what' voters might be a clever Lib Dem 'core vote' strategy but it will turn off many swing voters in any future In campaign. All the more reason for politicians to represent the view held by the majority of voters and to test the limits of EU reform before forcing them to choose between In or Out.

Fact-checking the Clegg v Farage EU debate

The first EU debate between Nick Clegg and Nigel Farage on LBC was for the most part restrained with a surprising amount of detail and substance. Most of the key fault lines in the UK-EU relationship were touched on.

However, given that the two men represent the polarising ends of the debate, there were also a number of claims that struggled in the accuracy department. Here is our quick 'fact-check' of the key debating points:

Claim - Clegg: I supported a referendum on Lisbon

Verdict: Technically true but highly misleading

On the referendum question, Clegg said that when it came to new EU Treaties transferring new powers to Brussels,

"I've never wavered in that position, that's why the last time the rules changed, something called the Lisbon Treaty, I said there should be a referendum."

It is true that the Liberal Democrats called for referendum on Lisbon but crucially it was an in/out referendum which was not on the agenda at the time - the issue wasn't even put to put to a vote. There was however a vote on whether to have a referendum on the Lisbon Treaty itself on which the party abstained, despite the fact that together Tory MPs, Lib Dem MPs and Labour rebels could have passed it. Clegg is being highly disingenuous by blurring the distinction between an in/out referendum and a treaty specific one. Farage's quip that there was no point waiting for a new Treaty as powers were being transferred to the EU every week via directives and ECJ rulings was quite effective in this context.

Claim - Farage: Under EU rules we have a completely open door to 485 million Europeans 

Verdict - Partially true but unclear on the numbers

It is true that the free movement of labour is a fundamental principle of the EU and the UK cannot limit the numbers of EU migrants coming over. However, Clegg was right to point out that the right to free movement is not completely unqualified - under the free movement directive migrants have to be able to support themselves financially or have 'reasonable' prospects of finding a job.

In terms of Farage's 485 million figure though we have to say we are a bit confused as to where exactly this comes from - the population of the EU28 is around 506 million, which minus the UK's approximately 63 million leaves 443 million.

Claim - Clegg: 3 million jobs would be at risk if UK left the EU

Verdict - Highly unlikely - would depend on a range of other factors

Clegg cited the well-worn '3 million jobs linked to the EU figure' despite established doubts over its veracity. Recently those tending to cite this number have replaced "depend on" with "linked to" but it's still dubious. As we've argued in the past, this claim is one of the most conspicuous examples of a rogue statistic without any credible counter-factual attached to it. The assumptions behind the 3 million jobs figure is that there would be no trade at all trade with Europe if the UK left the EU, which of course is nonsense -  a similarly heroic assumption to that which Better Off Outers make when calculating the cost of EU membership based on all regulatory cost magically disappearing on Day 2 post-Brexit.

Claim - Farage: UK would hold the whip hand in negotiations over a new trade deal with the EU

Verdict - Very uncertain 

Farage argued that in the event of an exit, the UK would "hold the whip hand" in trade negotiations with the EU due to the EU's trade deficit with the UK. We've looked at this in detail - the key point is that while this is true in the area of goods, when it comes to services - a crucial and thriving area of the UK economy - this is not the case. So with that logic, EU countries would have incentive to strike a deal with the UK in goods but not services including financial services. Secondly, the process for leaving the EU - the so-called Article 50 - actually involves less control for the UK than is often assumed, including a Qualified Majority Vote on the final deal in which the UK will not take part.

Claim - Farage: 75% of UK laws come from the EU. Clegg: no it's 7%

Verdict - Both are wrong

The contentious topic of how exactly how many UK laws are derived from the EU also came up, with Farage gleefully citing Viviane Reding's absurd claim that 75% of UK laws are decided in Brussels (as we've argued many times, Reding must secretly be on the UKIP payroll). Clegg went with the House of Commons' Library's briefing which estimated this to be around 7%. Regular readers will know we've analysed this in painful detail and the truth is it is simply not possible to say exactly - what's clear is that it's neither 7% (this only counts primary legislation which isn't meaningful at all) nor 75%. (But basically too many).

Claim - Farage: We give the EU £55 million per day

Verdict - True if counting gross cost, untrue and misleading if counting net cost

Farage is correct that the UK's contribution to the EU works out as around £55 million per day. However, that it is a gross figure which does not include the UK rebate (cold, hard cash the UK gets back from Brussels every year) and nor the UK's receipts from the EU budget (even if this is only UK taxpayers' cash being re-routed via Brussels).

Claim - Clegg: Without the EAW we'd struggle to extradite criminals and terrorists

Verdict - The EAW makes the process faster but it is not indispensable

The European Arrest Warrant (EAW) is used by EU states to speed up extradition procedures. It is true that the EAW has been used by the UK to recover suspected terrorists and other criminals from other EU states who have subsequently been found guilty and locked up. It is however untrue to claim that suspects such Hussain Osman and Jeremy Forrest could not have been recovered without it. Also before the EAW was agreed, there were agreement on extradition and the UK managed to successfully extradite plenty of criminals from EU countries through bilateral procedures. These were considerably slower but it is highly unlikely that with or without the EAW Italy would have wanted to hang on to Hussain Osman or France to Jeremy Forrest.

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).

Miliband’s EU pledge divides UK media – but is largely ignored in Europe

There is this much chance we will hold an
EU referendum if I'm Prime Minister

Ed Miliband’s intervention yesterday – in which he said he would only hold an In/Out referendum in the event of a new EU Treaty transferring specific powers from the UK to Brussels – has, as expected, divided commentators and media opinion in Britain.

Echoing a similar point we made in our response yesterday, the Telegraph’s leader describes Labour's new policy as a "classic fudge" and argues that:

"Effectively, Mr Miliband is offering either more Europe or no Europe... The Tories and Labour like to give the impression that they have fundamentally different policies. But they are, in truth, remarkably similar”.

Also in the Telegraph, Peter Oborne argues that the new policy is

"by far the biggest mistake of [Miliband's] leadership... [this] unforced error is a priceless gift for David Cameron because it amounts to an unequivocal vindication of the Prime Minister’s decision last year to promise a referendum on Europe after the election.” 

However, on Conservative Home, Lord Ashcroft warns that Miliband’s announcement could lure the Tories into talking only about one thing – Europe, arguing:

“the Conservative Party would not only be missing the chance to talk about the things most voters care about more, like the economy, jobs and public services. It would also, as far as these voters are concerned, be proving again the out-of-touchness (outness of touch?) of which it has for so long been accused." 

The Sun has commissioned a snap YouGov poll which found that 50% of voters disagreed with Miliband’s pledge to only hold an in/out referendum if more powers are transferred to the EU – a move he admits is “unlikely” - while 32% backed his policy but nearly twice as many people regard it as a cowardly move rather than a bold one. The Sun's leader argues that the wait-and-see approach has made Miliband “even more unpopular” with voters and the paper concluding that he'd have been better off "keeping schtum".

The FT broadly endorses Miliband's speech though echoes our caveat that “Mr Miliband’s policy does not guarantee the British people the right they should have to an in-out referendum if the bloc ultimately redesigns the way it operates in the wake of the eurozone crisis.”

In a less coherent leader, the Guardian argues that Miliband is desperate to avoid having to deal with a referendum if elected as:

"Trying to avert an "out" vote would drain all energy from anything else a Miliband government might want to do; enduring one would sink it entirely."

What about European media? Well, surprisingly, Miliband has been largely ignored. There’s almost nothing at all in the German press, though Der Spiegel's Carsten Volkery – not known for being the Tories' greatest fan – argues that:

“Chancellor Angela Merkel, French President François Hollande and the EU Commission should now secretly have their fingers crossed for Miliband. For all public expressions of sympathy for Cameron’s reforms, the British referendum seen as a massive nuisance in the rest of the EU.”

Walter Oppenheimer, London correspondent for Spanish daily El País, writes that Miliband's decision not to hold an EU referendum:

"It is, however, a very calculated risk: it can cost Miliband some votes – and who knows whether those votes can cost him the election – but leaves his hands free if he manages to get into Downing Street."

The French press has almost nothing bar news agency write ups, ditto in the Italian and Spanish press, although Miliband got a couple of hits in Switzerland. The speech was picked up by the Polish Press Agency but they focused on the immigration/access to benefits angle and completely ignored the wider referendum issue. The Nordics are quiet too, despite Swedish Foreign Minister Carl Bildt trying to weigh in on the debate yesterday.

We won’t pass judgement as to why Europe has so profoundly ignored Miliband.

Czech election day: Which political party will prove the least unpopular?

Someone is unhappy with the way things are going

Czech artist David Cerny is best known for his satire of EU nations that caused both outrage and amusement across the EU. Today his target is closer to home - the Czech political class and in particular Czech President Zeman, erecting a giant sculpture on the river Vltava that needs little explanation. Cerny's feelings are widely shared and point to a general disillusionment with the political class ahead of elections on today and tommorow.

The elections themselves have been brought forward by seven months following the collapse of the centre-right ODS led coalition following a combination of bizarre corruption allegations involving former PM Necas' mistress, now ex-wife and state intelligence services (part of a wider deterioration in democratic standards across Central and Eastern Europe). President Zeman then appointed Jiri Rusnok (who served as Finance Minster when Zeman was the PM between 2001-02) to lead a caretaker government which fell after it failed to win parliamentary support. In other words, a right old mess.

Here is the latest poll compared to the 2010 results:

The big factor here is the fragmentation of the established mainstream centre-right ODS party. Taking up the slack are a kaleidoscope of small untested centre-right and independent parties centred on colourful individuals, including Úsvit founded by a Japanese/Czech businessman, ANO founded by a Czech billionaire and TOP09 led by former foreign Minister Karel Schwarzenberg. President Zeman's own hopes of a breakthrough for his SPOZ party have been hampered by revulsion at his own politicking. One of these parties is likely to be the junior partner for the social democrats (CCSD) who are clearly in the lead and who have said they would prefer not governing with the unreformed Communists (KSCM) who command 18% of the vote and resurrect bad memories for some (although this is also a possibility).

It was once thought that the Czech Republic had escaped the chaotic politics of the region by settling down into a two party system, the Social Democrats and the centre-right ODS. It now appears Czech politics is just as turbulent as many other former communist EU states, where parties have short lives and bad endings.

Moreover, the marginalisation of the ODS will be a setback for David Cameron, as the party is a key ally of the Conservatives in the European Parliament and under Necas, the Czech Republic was the only other country not to sign up the fiscal treaty. It is hard to see a social democrat led government being naturally on board for the kind of pro-competitiveness reforms that Europe so badly needs.

The new Eurobarometer is out. Here's what you won't find in the European Commission's press release

The latest Eurobarometer is out, and as per tradition, the European Commission does its best to spin the findings of a survey that, particularly since the eurozone crisis broke out, hardly makes for happy reading.

The press release accompanying the latest Eurobarometer carries the headline, "A greater dose of optimism", which is justified by the fact that "those saying they are optimistic about the EU's future outnumber those who say they are pessimistic in 19 out of 28 countries".

Now, here are a couple of findings from the same survey that you won't find in the European Commission's press release (but are available here):

• The number of those who "tend not to trust" the EU is again at 60% - a +3% increase from the previous survey. The total figure includes 83% of Cypriots (+19% from the previous survey), 80% of Greeks (-1%), 75% of Spaniards (+3%) and 71% of Portuguese (+13%). To be fair, the level of confidence in national governments/parliaments in these countries is even lower - but that shouldn't be of great consolation.

• On the question "do you feel a citizen of the EU?", a majority (62%) of respondents agree, although in three countries more people disagreed than agreed with this statement. That this includes the UK may not be a big surprise, but that Greece and Cyprus are on there as well shows how badly the crisis management has tarnished the EU's reputation.

• A relative majority of Europeans have a neutral image of the EU (39%, =), and the proportion of respondents for whom it conjures up a positive image continues to be just higher than the proportion for whom it is negative (30% positive, unchanged; 29% negative, unchanged). Again, in Greece, Cyprus, Spain and Portugal a majority (sometimes relative, sometimes absolute) of respondents have "a negative image" of the EU.

• Two-thirds of Europeans say that their voice does not count in the EU (67%), a 3-point increase taking this score to its highest level since autumn 2004 when the question was first asked. This proportion has increased almost continuously since spring 2009, from 53%. Only just over a quarter of respondents (28%, -3) agree that their voice counts in the EU.

• 49% of total respondents don't think the EU "makes the quality of life better in Europe", compared with 43% who think it does.

• On the euro, public opinion is hugely divided with only a 9% net approval rating - 51%, support it and 42% oppose it. In countries that are euro members approval stands at 62% (down 4% since Autumn 2012) but only at 29% in non-euro countries. 

The UK electorate is in the market for something more than the false choice of status quo or exit

When it comes to the question of whether the UK ought to stay in the EU there are two key considerations. Is continued membership the best solution from an economic perspective (trade, regulation etc) and also is it democratically sustainable? (Others will also cite 'influence' and geopolitical clout).

Leaving aside the first consideration for now, the second one has long generated a heated debate, not least in the comment section of our blog, with some regular readers pointing out to us that a majority of the UK public wants to leave the EU. End of story.

In his Europe speech, David Cameron warned that support for the EU was “wafer-thin” – which as we highlighted at the time was a long-term trend (albeit exacerbated by the crisis).

Recent polls have shown an ever larger margin in favour of exit, with a widely cited ComRes poll over the weekend showing that 46% would vote to leave, 24% would vote to stay in, with 30% undecided.

However, there is, of course, an important sub-story here. While this and similar polls have been interpreted by some as a mandate for withdrawal, when a supplementary question about restoring “some EU powers” to the UK is posed, the proportions change quite dramatically with 43% (including 48% of Conservative and 20% of UKIP voters) voting to stay in, 24% voting to leave regardless, and 34% undecided. These figures are consistent with the results of similar questions asked in a number of opinion polls in recent times.

In fact, restricting the choice in the EU debate to only In/Out is rather odd. How often does that happen in other areas of public policy? Would a choice between a 100%, all encompassing welfare state or no welfare state at all, for example, be a fair choice put to the British public? Unlikely, as most of the public wants something in between.

That we consistently see such a large swing in opinion from 'Out' under a straight In/Out scenario to 'In' under renegotiated terms shows that one of the clearest trends in UK public opinion is that the UK public wants to see new EU membership terms first, and only then withdrawal if that fails.

As such, for those who cite the issue of democratic legitimacy as their prime motivation, whilst they most certainly have a point, there is no reason not to at least give Cameron a good shot at his strategy of re-negotiation followed by a referendum.

The democratic question is also frequently cited by those who demand an immediate referendum, including the MPs who voted in favour of the amendment to the Queen’s Speech last week. However, buried in the poll data was an interesting finding that ought to provide some food for thought – 20% of voters (including 52% of Conservative voters) said they had more sympathy with David Cameron while 18% sided with backbench MPs. Meanwhile 48% said they did not have more sympathy for either side.

If there was an overwhelming support for an immediate UK exit - as opposed to substantially reducing the EU's powers in Britain - one would have suspected far greater support for the handful Tory backbenchers who are pushing for an early referendum bill. This isn't to say that there is a major trust issue when it comes to Europe, and that some Tory backbenchers didn't make valid points last week, but merely that the public, again, is basically quite content with the basic idea of the UK negotiating new membership terms followed by a public vote.

At the same time though, politicians and officials who think they can fudge this process or procrastinate over addressing the EU's involvement in too many areas of national life ought to be very careful. The electorate's desire to staying the EU is clearly predicated on substantial reforms taking place.

Public support for the EU drops by 16% in one month: is popular support for the euro in Greece finally about to wane?

As we've noted in the past, a factor that will determine whether the eurozone can hang together in the long term is the extent to which the public in the South begins to see the euro and EU austerity as synonymous.

For example, despite everything that has taken place in Greece, this has not been the case, with a majority of Greeks consistently in favour of remaining inside the euro. The choice is instead perceived as being between austerity or some form of alternative. This is why we rightly predicted that Greece would remain inside the euro following its hectic dual elections last year (at a point when many analysts were predicting an imminent Grexit).

But is this now starting to change? 

Possibly.

A new Public Issue poll shows that 66% of Greeks now have a "negative opinion" about the EU. For a country that has traditionally has been staunchly pro-EU, that's bad enough. But extraordinarily, when the same question was asked only a month ago, 'only' 50% of respondents said that had a negative opinion  about the EU- a massive 16% increase in only a month, possibly owing to the handling of the Cypriot bailout and the renewed Troika push for civil service cuts in Greece. Those with a positive view dropped from 48% to 31% in the same space (see the graph below).

A separate poll by Marc for Alpha TV asked the question, “In case it’s not possible to improve the conditions of the loan agreement, what do you think we should do?” 53.8% answered "remain in the EU and the euro", while 41.3% said they wanted to "leave the EU and return to the drachma" (4.9% don't know). Note that this was a question about leaving the EU, not only the eurozone. Whilst still a majority in favour of sticking around, to our knowledge, there has been no Greek opinion poll to date with such a large share in favour of leaving the euro and the EU.

Incidentally, the Public Issue poll also asked who respondents wanted to see as Prime Minister. Top candidate? “None”. (see graph)

We're not drawing any firm conclusion from this, although if this trend continues it will be significant. Currently a majority of Greeks believe that things "would be worse" outside the euro. It's worth listening to our interview with leading German economist Hans-Werner Sinn, which we published today, on the prospects for Greece in the euro. One thing is clear: this won't be easy.

Yet again the eurozone crisis is butting heads with national democracy

After a lengthy absence Portugal returned to the headlines over the weekend with the Constitutional Court ruling that some of the government austerity measures were unconstitutional. Here are the key details:

• The court found that four out of nine key savings measures included in the government’s latest budget were unconstitutional. These measures focused on cuts to public sector wages and pensions – the court deemed these unconstitutional since they hit public sector workers disproportionately hard. They also ruled against cuts to unemployment and sickness benefits.
• The measures amount to savings of €1.3bn (0.8% of GDP) which will now need to be found elsewhere. If they are not found, then Portugal’s deficit this year could reach 6.4% rather than the 5.5% currently targeted.

What does this mean for Portugal and the eurozone?

• The ruling was the cherry on top of a bad week for the government after a close ally of Prime Minister Pedro Passos Coelho resigned and the government faced a no-confidence vote in the parliament. Fortunately, it has so far survived these problems (new elections would bring huge uncertainty) but its support continues to be eroded.
• The previous political consensus in favour of the bailout and the accompanying austerity has now vanished, the opposition is likely to become increasingly vocal in its anti-austerity approach.
• The Commission has warned that the extension of the bailout loans agreed recently will be under threat if the government does not meet its targets.
• The cuts are likely to be found elsewhere but they may have more of a negative impact on growth, although this remains uncertain. One thing that is clear is that the public sector wage and pensions do need to be adjusted if Portugal is to become competitive and particularly if it is to recover through export led growth as the bailout programme currently targets. The inability to adjust these areas could harm Portugal in the long run.
• That said, this is not the first time this has happened. Last July, the court made a similar ruling on public sector wage cuts. The fact that this has happened again suggests the government may be struggling to find savings elsewhere (why else push on with cuts it knows stand a good risk of being blocked), and doing so may take longer than some expect.
• Legal points aside, experience (particularly in the Baltics) suggests that wage cuts in the private sector often follow or go hand in hand with public sector ones – at the very least, buy-in is needed across the economy and the private sector is unlikely to lead such an adjustment unless prompted to (wages are sticky on the downside). In this sense, although the cuts may have disproportionately hit public sector workers initially it may be necessary part of the internal devaluation approach taken (whether this approach is correct or not is another question).
• And of course, this adds further delays and uncertainty in the eurozone – along with lack of government in Italy and capital controls/bailout in Cyprus.

This is likely to rumble on for a while yet as the Portuguese government searches for savings elsewhere which will meet the requirements of the troika. Yet again, the eurozone crisis is butting heads with national democracy, in this case specifically constitutionality. Plenty more of that to come we expect.

What keeps the folks in Brussels and Berlin awake at night?

Possibly this graph - from our new report on the internal devaluation needed in the PIIGS for the euro to remain intact.

Source: Eurobarometer

It shows how trust in the EU amongst voters in the PIIGS has on average fallen from 55%  in 2001 to 25% in 2012, in the wake of EU-mandated cuts. On average, 66% of voters in these countries now mistrust the EU (up from 26% in 2001). And Spain still has half of its internal devaluation ahead of it (not to mention Greece). This won't be easy.

Suggested reading material for the Commission

Bearing in mind that it is often said that someone's choice of newspapers reflects their particular political prejudices, the details of the newspaper subscriptions of the EU Commission’s spokespeople, revealed by Handelsblatt’s Ruth Berschens, are very telling indeed. Ruth writes that:

"All 32 spokespeople and their deputies read the British Financial Times, at least eleven order the French Le Monde, while six order the Italian Corriere della Sera and the Spanish El País. German papers on the other hand do not reach such lofty readership heights in Brussels. Currently not a single spokesman has a subscription to for example, the widely circulated Süddeutsche Zeitung”. 

Now of course, you can read a paper without a subscription and we're sure that the Commission keeps an eye on the German debate in various different ways. Still, it's an indication of something. While all the papers above are certainly respectable and informative, they are limited by the fact that they are all quite close to the establishment in their respective countries, and also generally afford the Commission relatively favourable coverage. Limiting your reading to the above papers will certainty not give you the widest perspective of what is really happening on the ground. There is also a great big German-sized geographical hole.
 
As Ruth herself goes on to point out, this leaves the Commission flying blind in the face of public opinion in the EU’s most crucial player: 

“How can EU officials and European politicians understand German sensibilities, if they do not speak any German and do not consult the German media? Short summaries of German newspaper article translated into English are not enough to suddenly make eurocrats experts on Germany. The flip-side of this low sensitivity to the domestic political constraints of the federal government are the completely exaggerated expectations of Germany.” 

Here are a few recent comments from the German media from the last few months that the Commission’s spokespeople may have missed: 

“Eurobonds undermine confidence in the fact that we can learn any lessons from the causes of the crisis. Athens’ sloppiness and denial would be tolerated while inaction would be seen as an attractive course in other countries. Why bother with reforms, why bother to make welfare systems, labour markets and the public sector sustainable when money will just fall from the sky?”- Florian Eder, Die Welt’s Brussels correspondent, 25th May 

“Hands off ‘Made in Germany’… this label is the envy of the world…Made in Brussels is the exact opposite – expensive regulations that shackle the economy.”- Prof. Ernst Elitz, founding director of Deutschlandradio, writing in Bild, 17th January 

"In dealing with Member States, the European Commission is rigorous. There is no measure that is too harsh when it comes to restructuring their budgets... However, when it comes to the salaries of the 45,000 EU officials, they exercise anything but restraint - this not only damages the credibility of all savings claims, but the reputation of the EU as a whole.”- Hendrik Kafsack writing in FAZ, 2nd March 

“In wanting to protect taxpayers, the UK is on the right side in the debate over bank capital rules... If Europe does not lead the way, the next crisis will again be an expensive one for taxpayers.”- Alexander Hagelücken, Süddeutsche’s economic correspondent, 4th May 

While we would encourage the Commission to go directly to the source and consult as many original German newspapers as possible, they could do far worse than signing up to our daily press summary which pulls together various sources from all over Europe…and it's free!

Euro opinion polls point to more fudge

Some interesting opinion polls from the heart of the eurozone from the last couple of days:

In Greece, a series of polls shows momentum ahead of the country’s re-run election next month shifting slightly from the radical left anti-bailout and austerity SYRIZA party to the pro-bailout and austerity centre-right New Democracy party, though SYRIZA is still set for gains compared with its election result earlier this month. New Democracy, which won the elections with 18.9%, now leads with between 25.6% and 27.7%, a lead of between 0.5% and 5.7% over SYRIZA. That means that together with the establishment socialist PASOK party, which won 13.2% at the elections, a pro-bailout coalition could be formed with a majority of seats in the Greek parliament, something that evaded the parties last time.

The polls also showed support for staying the euro at 65% versus 25% against. While staying in has enjoyed a consistent majority, voters are potentially starting to re-align their party choice accordingly - realizing perhaps that ripping out the bailout package comes with massive risks - albeit this could change again before the elections and remember, SYRIZA remains the joker in the pack.

Meanwhile in Germany, public opinion seems to be shifting in the anti-euro direction, with an opinion poll published on Friday by German state TV ZDF finding that 79% of respondents rejected eurobonds as a solution to the crisis, which is a stark reminder for the rest of Europe how far away we actually are from eurobonds. Interestingly, though, support for euro membership itself was also waning, with 50% (up from 43% in February) saying they believed it carried more disadvantages than advantages for Germany, with 45% taking the opposite view (down from 51% in February).

These opinion polls - together with events of recent weeks - point towards one conclusion: we're looking at yet more fudge. As we've pointed out before, as sceptical as one might be about the future of the euro, there's still considerable scope for negotiations on all sides of the Greek crisis, and therefore, chances that the country can find a settlement and agreement with its creditors after the elections that allows it to stay in the euro remain strong. It would be different if the public were to turn against the euro itself, which it isn't at this time.

The stakes are simply far too high for another round of Russian roulette.

Anti-austerity inside the eurozone: Greek voters stick to their potentially false choice

The key trend in Greek opinion polls holds steady: voters back anti-austerity parties in great numbers but  remain committed to staying in the euro in equally great numbers. The latest Public Issue poll released yesterday put the radical left Syriza as the largest party with 30% of the vote, New Democracy on 26% and Pasok on 15%. The figures suggest a surge in support for Syriza but also a move back towards the larger parties, with smaller parties falling in the polls.

Interestingly, a poll from Ipsos suggests that 70% of Greeks would vote to keep the euro if a referendum on the issue were held today, this compares to 50% of Italians, 62% of French, 51% of Germans and 55% of Spaniards. Interestingly, 38% of Italians would vote to leave the euro if a referendum was held today - that's quite high given the country's traditional support for the single currency.

On a less surprising note, from today's Die Welt we learn that fears over Greece leaving the euro has triggered yet more Greek tax evasion. Greek tax revenues between January and April were €500m lower than anticipated in the 2012 budget, while April’s takings fell by 13% on the previous year.

That is not a good sign.

Do Germans really want a "United States of Europe"

Over on the Telegraph blog, we argue:

If judged solely on the British public debate on the future of the EU, one could be forgiven for thinking that – driven by eurozone crisis – everyone else in "Europe" is now happily storming towards a European superstate, leaving the UK behind. It's sort of inevitable, the logic goes.

Such a narrative is deceptively simplistic.

A new, interesting YouGov-Cambridge poll out this week, looking at European attitudes amongst citizens in the UK, Germany, France, Italy and Scandinavia is a case in point. As expected, a full 40% of Brits want a “looser” relationship with Europe. Another 13% want no more integration while 20% want to withdraw altogether. These attitudes span the political divide.

Pointing to the results in the three eurozone countries surveyed, YouGov-Cambridge concludes: "The eurozone and Britain are heading in two starkly different directions, with Europe on course for more integration – and possibly all or some elements of a 'United States of Europe." But is this really what this poll, and similar ones on voter sentiments, are telling us?

In particular, does such a conclusion capture the complex debate currently taking place in Germany – a country which, in the wake of the euro crisis, to a large extent holds the key to the future of Europe? (See here, here and here for examples.)

Regarding the particular question which commentators have focused on, respondents were asked whether they supported “'turning the EU into a fully integrated ‘United States of Europe’, with a central European treasury that strictly enforces common rules on national budgets and government spending for individual countries”. 35% of Germans answered in favour (as did 38% of French and 63% of Italians).

It's easy to get excited about this, but it is important to consider a number of factors. First, German voters are actually split right down the middle on the question, with 32% saying they opposed the idea. Secondly, the question will have had different connotations in Germany, where federalism means a structure with clearly defined powers across all levels of government, with a system of checks and balances. In Britain, it simply connotes more EU centralisation. Thirdly, and most importantly, the question itself is phrased in such a way that implies greater enforcement of budgetary discipline.

It’s hardly surprising that German voters would support this, given the widely held perception there that what "profligate" eurozone members need is more budget discipline (German taxpayers’ cash is on the line, remember).

Unsurprisingly, as soon as the focus switches from more budget oversight and discipline to more cash, Germans’ support for further integration plummets, which YouGov-Cambridge also concedes. For example:

- In a separate question, which made no reference to strict penalties” or “enforcement” 68% of Germans said they believed “tax rates and national budgets” should be controlled nationally

- 53% think that it’s “wrong” for Germany to spend money to save the euro

- 40% think Eurobonds would be a “bad thing” for Germany, and only 17% think they would be a “good thing”

- 51% want Greece to leave the euro, which per definition is integration in reverse

In other words, Germans – and voters in most other EU countries for that matter – tend to be supportive of EU integration where this conforms to their own image, but they otherwise oppose it. This also means that Germans still remain opposed to the form of eurozone integration that to many obersvers really counts at the moment – more cash going from north to south.

There clearly are areas where UK public opinion differs from core eurozone countries, for example on military cooperation and banking regulation. But following the money, all of a sudden, the ideological gap between German and British public opinion looks a lot narrower.

All of this to say that, ultimately, we have no idea how voters in the eurozone – and Germany in particular – will respond to proposals for a fully-fledged political and fiscal union, and therefore what the future of the euro will look like.

Poles go cold on the euro

In our daily press summary this morning we covered an interesting Polish CBOS opinion poll which found that support for eurozone membership had fallen to an all time low: only 32% of respondents declared themselves in favour, compared with 60% against. Over the past decade therefore support for joining the euro has halved; an all time high of 64% was recorded in July 2002. Given that the stated goal of the Polish government is to join in the euro in the next few years – indeed it is bound by the EU Treaties to join at some point in the future – the rising public opposition is significant.

However the poll also had a number of other interesting findings which are worth highlighting:

• 42% support Poland’s accession to the intergovernmental ‘fiscal treaty’ vs. 35% against
• 57% are opposed to Poland lending an additional €6.3bn to the IMF to possibly support vulnerable eurozone members vs. 32% in favour
• 62% believe that further European integration would be beneficial for Poland vs. 26% who believe otherwise
• 81% believe EU membership is beneficial for Poland vs. 12% who believe otherwise

Clearly a bit of a mixed bag with the strong opposition to contributing to the IMF for the purposes of bolstering the eurozone showing the limits of the ‘European Solidarity’ that Polish politicians often espouse.

The poll result could serve as another reminder to those who argue that the euro is an integral and necessary component of the EU and further integration, and that rejecting the euro would signal the death knell for the European project as a whole. Ultimately this poll and other like it are good news for supporters of a more flexible EU arrangement, where countries can integrate more closely together if they wish, but can also remain outside of some common structures – such as the single currency.

Some Friday afternoon polls...

Over at Open Europe, we admit to be poring over EU-related polls from the German-speaking world, like a German Commission offical over the Greek accounts.So here's some polling for a Friday afternoon.

A survey for Focus published today shows that 50% of Germans would be willing to exchange the euro and get the D-Mark back, while 48% preferred holding on to the euro. A year ago, 50% wanted to keep the euro, while 47% wanted a return to the D-mark.

Interestingly, 40% of the respondents stated that they were “sceptical” about Germany's EU membership - which seems like a surprisingly large share. 46% stated to have "personally" benefited from Germany’s EU membership, but, mirroring the "sceptic" share, a full 40% said that they had not personally benefited from Germany's membership.

Meanwhile, according to a survey conducted by the Austrian Gesellschaft für Europapolitik, only 37% of the Austrian people think Austria has benefited from the Single Currency, whereas 48% believe it hasn't been beneficial. While, in answer to the question: should the EU have a direct influence on national budgetary policy? 58% voted no, compared to 33% yes.

Additionally, 30% referred to a ‘United States of Europe’ as a ‘fitting model’ for the EU, while 50% disagreed.

A bit of a mixed bag then, but some clear signs of growing fears over the state of the eurozone in these core european electorates. Now the key question is, if and when this feeling will feed through to election results, we for one are waiting with bated breath.

How to lose support for EU free movement and alienate people

The European Commission just made it a lot more difficult to defend free movement in Europe. Free movement and open borders (two separate but related EU issues) are very difficult things to sell to the public, witness the Bombardier row (which had complicated causes, but partly flowed from competition rules designed to uphold free movement/the EU single market), the Danish restrictions on the Schengen agreement or the Lincolnshire strikes back in 2009.

In public opinion, free movement is usually bundled together with other complex issues such as immigration, the 'British jobs for British workers' debate, welfare and potential wage dumping. Economically, we would argue that free movement is on the whole beneficial, but politically, due to its society-changing potential, it's potentially explosive.

Therefore, free movement has to be treated with silk-gloves, with constant attention paid to national sensitivities. If Europe wants to keep it, national governments simply need to be given some discretion, within reason.

Clearly, this isn't something that the Commission understands. This week, the Commission threatened to take legal action against the UK's "right to reside" test on EU nationals, arguing that it violates EU law. Under UK rules, British citizens automatically qualify for benefits such as child benefit, child tax credit, state pension credit, jobseekers' allowance and unemployment support. But nationals from other countries have to pass a right to reside test before they can qualify for such benefits. The Commission argues that this practice indirectly discriminates against nationals of another member state, in turn breaching EU rules on social security co-ordination. The Commission insists that existing EU rules on who qualifies as a resident of a different member state are already strict enough to make sure that "only those persons who have actually moved their centre of interest to a member state (other than their own) are considered habitually resident there".

The Commission's statement was met with a barrage of criticism in the UK.

Employment Minister Chris Grayling said, "This is a very unwelcome development...I’m really surprised the European Commission has chosen to go into battle on this very sensitive issue, when there are clearly far more pressing problems to solve in Europe."

Work and Pensions Secretary Iain Duncan Smith wrote in the Telegraph:

"These new proposals pose a fundamental challenge to the UK's social contract. They could mean the British taxpayer paying out over £2 billion extra a year in benefits to people who have no connection to our country and who have never paid in a penny in tax. This threatens to break the vital link which should exist between taxpayers and their own Government."

"France, Germany and Denmark have all spoken out against the commission's insistence on issuing this week's provocative decision on benefit payments. This decision confirms the worry that the EU is pulling more areas of national competence into its fold. Yet these are decisions taken outside of national democratic processes by unelected and unaccountable institutions."

Given the recent statements from various prominent Labour party figures, apologising for "getting it wrong" on EU immigration, the Commission is likely to face more or less united UK opposition.

Even supporters of free movement will find it hard to see how the UK's "right to reside" tests are unreasonable. The Commission is now picking a fight with several EU countries, on the hugely sensitive issue of "welfare tourism" at a time when populist parties are on the rise across Europe.

Either the Commission backs down, or it risks facing a massive backlash.

As we've mentioned before, if the Commission wants to squash all public support for the EU, it's doing a pretty good job.