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Analysis

Commentary

'Clean Brexit': May must be positive

by Gerard Lyons in London | Fri 22 Sep 2017

The EU has deep-rooted structural problems, not least the relationship between Brussels and national parliaments and high youth unemployment. Appropriately, UK Prime Minister Theresa May is making her latest EU exit speech today in Italy, a country with living standards no higher than at the turn of the century. In her address in Florence, May must set out an uplifting vision of a UK with a global role. Brexit means the UK will leave both the single market and customs union – a 'clean Brexit'.

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Queen Angela the Uneasy

by David Marsh in Madrid | Fri 22 Sep 2017

Angela Merkel, preparing to enter her fourth successive period as German chancellor after her expected victory in Sunday's election, looks likely to be dubbed the 'Queen of Europe'. Yet her crown will sit uneasily – a result of the probable parliamentary entry of the anti-euro party Alternative for Germany. Merkel's reduced manoeuvring room in coalition-building and waning hold on power have big implications for the ECB's quantitative easing programme, which, while spurring a European economic recovery, has undermined her core support.

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Brexit is a British problem

by Antonio Armellini in Rome | Thu 21 Sep 2017

Conservative governments since 2010 have mystified the EU by first organising a referendum on exiting the union without a strategy in case the Leave side won, and then needlessly calling an election that deprived Theresa May of a parliamentary majority. In her speech this Friday in Florence, May should try to make some sense of the mess. The EU27 will listen with interest, but Brexit is not their No. 1 concern. They are perplexed by what appears a colossal own goal. But they are equally confident that this is ultimately a British problem, not theirs.

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Britain's 'most stupid decision'

by OMFIF analysis | Tue 19 Sep 2017

Britain's doomed attempt to stay in Europe's exchange rate mechanism on 'Black Wednesday' 25 years ago was 'the most stupid decision I have seen in 40 years of public life', according to Lord (Andrew) Turnbull, former UK cabinet secretary. His bittersweet judgement was among multiple postscripts to Britain's 23-month membership of the ERM, the forerunner of economic and monetary union, at the 15 September London launch of OMFIF's 'Six Days in September: Black Wednesday, Brexit and the making of Europe'.

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Next UK-German monetary struggle

by David Marsh in London | Tue 19 Sep 2017

The next big European struggle between Germany and Britain hinges on money. This is the key to a prime question hanging over British negotiations to leave the EU: the amount of help Germany will give the UK to secure an acceptable deal. The problem for Theresa May is that any proposal for the UK to pay around £10bn per year over three years from 2019 as part of a transition programme would be anathema to many influential Conservatives. This could not only scupper the exit process but also bring down the government.

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Fed rate rise postponed

by Darrell Delamaide in Washington | Mon 18 Sep 2017

Market watchers following the September meeting of the Federal Reserve over the next two days believe the probability is rising that it will raise interest rates in December. Reports from the US labour department showing strong inflation data for August point in that direction. But the impact on the economy of Hurricanes Harvey and Irma will give the Federal Open Market Committee justification for postponing an increase this month. Erratic behaviour in Washington and questions of succession at the Fed exacerbate such uncertainty.

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May's premiership under threat

by Joergen Oerstroem Moeller in Singapore | Fri 15 Sep 2017

Intense political manoeuvrings by senior UK Conservatives underline Prime Minister Theresa May's tightrope walk over leaving the EU. A large part of the bickering is because no one knows exactly what kind of agreement Britain is seeking. This explains why negotiations with the EU cannot begin in earnest. This situation turns Brexit into a forum for domestic party politics. May will need statecraft she has not yet shown to survive a parliamentary debate holding her to account over what has happened so far.

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Reality at odds with rhetoric

by Danae Kyriakopoulou in London | Fri 15 Sep 2017

It was an unusual summer for Greece, without the familiar drama. Hope and optimism imbued the remarks made last week by French President Emmanuel Macron and Greek Prime Minister Alexis Tsipras, who spoke about his country's shift from 'Grexit' to 'Grinvestment' after nine years of recession. Reality, however, has been at odds with this rhetoric, revealing the government's ambivalence towards investment. Such issues will weigh heavily on discussions at the Eurogroup meeting of euro area finance ministers in Tallinn later today.

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Sterling will survive Brexit

by Gary Smith in London | Thu 14 Sep 2017

Saturday 16 September marks the 25th anniversary of Black Wednesday, the day sterling left Europe's exchange rate mechanism. As happened in 1992, questions are again swirling around the future status of the pound. It is important to differentiate between Britain as a destination for foreign direct investment, and the appeal of sterling as a reserve currency. A near-term fall in value – especially if viewed as an isolated consequence of Brexit – is unlikely to erode significantly sterling's reserve currency status.

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Why UK's European plans went awry

by David Marsh in London | Thu 14 Sep 2017

Britain's 1990 entry into the ERM had been under sporadic review for a decade, punctuated by fractious debate between Margaret Thatcher, her chancellors and Bank of England policy-makers; she was a reluctant convert. Once she was persuaded, the decision to join was a scrambled, clandestine act guided by deeply contradictory motivations, with leading partner countries and most cabinet ministers informed only at the last moment. Unsurprisingly, in the following two years, UK plans went awry.

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