‘Gloom’ After French Vote

The Washington Times (of all places) carries a UPI text about a Deutsch Bank research note on the economic consequences of the French ‘no’:

France’s rejection of the European Union constitutional treaty by a majority of 54.9 percent is a severe blow to European integration and threatens to depress European economy back into eurosclerosis as in the 1980s, warns Deutsche Bank in a research analysis published Monday.”
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I don’t think it’s fair to talk about European regulatory madness as long as there isn’t a directive handling… Cheese Rolling (from the BBC, hat tip to viewropa)

“Cheese Rolling is one of the oldest customs to have survived in Great Britain. It’s been going on for hundreds of years and some say it has its roots in pre-Roman times.

Today it is as popular as ever and the crowds turned out in large numbers at Cooper’s Hill in Gloucestershire to watch yet more brave souls risk life and limb chasing after a 7lb Double Gloucester cheese. The winner gets to keep the cheese they’ve chased after!”

EU Consumer and Business Confidence Fall

Just another item to add to the list of bad news:

European business confidence dropped to a 21-month low in May and consumers were the most pessimistic in a year as oil prices around $50 a barrel and unemployment near a five-year high dimmed the outlook for economic growth.

An index gauging confidence among 35,000 executives in the dozen euro nations fell to minus 11 from April’s minus 9, the European Commission said today in Brussels. Economists expected minus 10, the median of 29 forecasts showed. An index of consumer sentiment dropped to minus 15 from minus 13, the commission said.

German Unemployment Remains At 11.8%

Despite the recent surge in German GDP and export growth, and the ongoing structural reforms, German unemployment remains stubbornly high.

German unemployment was unchanged in May at close to a post-World War II high, dealing a blow to Chancellor Gerhard Schroeder’s chances of re-election.

The jobless rate, adjusted for seasonal swings, held at 11.8 percent, close to the postwar record of 12 percent recorded in March, the Nuremberg-based Federal Labor Agency said today. That was in line with the median of 31 forecasts by economists in a Bloomberg survey.

Divided Opinions in the Czech Republic

the Czech president has become the first prominent EU politician to call for the ratification process to stop after the French vote.

According to the Czech news agency CTK, Vaclav Klaus, a well-known eurosceptic, said that to carry on the ratification process would be useless, although the Czech prime minister has said he is in favour of continuing.

“The decision has been made and I hope everybody understands it”, Mr Klaus is reported as saying.

In fact, were the ratification process to continue, the Czech Republic has still not decided the actual method of the ratification and the government has admitted it will consider limiting the procedure to a parliamentary vote after all, since the constitutionional change necessary for holding a referendum has proved difficult to agree on among the different parliamentary parties.

If The Netherlands Vote No………

If the Netherlands vote ‘no’ tomorrow (and the opinion polls don’t seem to leave much room for doubt), then according to the FT Jack Straw will tell the House of Commons next Monday that the UK government is immediately suspending parliamentary passage of the European treaty bill. This means the ratification process will be dead, not just in theory (which I think it is now) but in practice. This announcement leaves me with a strange feeling. These days I don’t feel especially British, I am not a great admirer of Tony Blair and Jack Straw, but somehow they seem to have drawn the obvious conclusions, conclusions which clearly are not obvious to many other EU politicians. I can’t help thinking that if we could get to the bottom of why this is, we would understand a bit better why there is such a communication problem between the UK and other parts of the EU.

Britain is to suspend plans to put the European Union constitution to the vote if the Netherlands follows France and rejects the treaty in a referendum on Wednesday.

As the shockwaves of the French vote were resounding on Monday, it emerged that Tony Blair and Jack Straw, foreign secretary, have decided immediately to freeze plans for a UK referendum if, as expected, the Dutch vote No.

The government hopes other EU states would at once declare that rejection in France and the Netherlands meant ratification in all countries must be suspended. Even without consensus the prime minister and foreign secretary believe it would be politically impossible for the UK to carry on with its own ratification.

Incidentally, Jaques Chirac is to make a formal statement about the future French government and his interpretation of the vote on French TV tonight.

The Euro Continues Its Decline

The euro fell to a seven-month low in Asia and had the biggest fluctuation of any currency on concern the rejection of a proposed European Union constitution will slow the region’s economic integration…………

Against the dollar, the euro fell to $1.2370, the lowest since Oct. 14. It bought $1.2390 at 2:05 p.m. in Tokyo from $1.2475 late in Asia yesterday, according to electronic currency- dealing system EBS. The euro will probably decline toward $1.22, Jacobs said.

Update I: Now it’s hit $1.2371.

The euro’s initially muted reaction to the French vote on a holiday-thinned Monday turned into a sharp fall when it broke below key $1.2450 levels, pushing as low as $1.2371.

Now it’s at 1.2315, and this is also becoming a dollar rise story as the yen is also begining to fall against the USD.

The Euro lost support at 1.2450 in Asia on Tuesday and this pushed the Euro down to a low of 1.2315. The convincing break below 1.25 against the US currency will reinforce negative Euro sentiment and will raise speculation over a move towards the 1.20 level in the medium term.

To be continued.

Angela Merkel Promises…….

Angela Merkel, the German opposition Christian Democrat leader, has promised that initiatives to cut unemployment would ?be at the centre of my thoughts and actions?. Laudible ideals, delivering on them may prove rather more difficult than Ms Merkel imagines. Still, she is focusing the debate on the relevant areas:

Mrs Merkel acknowledged that Germany was one of the most expensive countries to do business. ?We have to be better [than competitors] to the same extent that we are more expensive [than them]?, by being ?quicker and more flexible?. She said ?globalisation is now the context in which our ideas of democracy and of a social market economy must prove themselves?.

Policy priorities would include measures to reduce government debt and to cut non-wage labour costs paid by employers as social security contributions, in part by introducing a new tax-funded health insurance system. Labour market measures would include a loosening of job protection rules and more decentralised collective bargaining.

In fact they are so relevant and to the point that it is hard to see Schr?der disagreeing with them. Interesting campaign in prospect.