Hanging In The Balance | A Fistful Of Euros

UK property prices have been hovering dangerously around the zero price growth mark for the last couple of months. Year on year growth is of course dropping substantially and we are now just below the 3% annual mark. Definitely one to keep watching.

UK house price inflation fell in August according to the Office of the Deputy Prime Minister, giving further indications of a slowdown in the property market. Annual inflation fell to just 2.8 per cent in August, down from 4 per cent in July and 13.6 per cent a year ago.

The ODPM reported that house price growth in London, which tends to lead overall trends in the market, slowed to 0.8 per cent from 0.9 per cent in July. The average house price in the UK barely changed in August, standing at ï¿½186,208 compared with ï¿½186,207 in July.

Some analysts have concluded that these numbers suggest that the market might be stabilising at current levels. …But there will be continued concern that as house price inflation on all the main indicators heads towards zero, the current stability in the market will not last. Nervousness is likely to increase as property investors realise they can no longer rely on the prospect of capital gains to offset the reality of low rental yields.

As opinion polls produce results wobbling uncomfortably back-and-forth between ‘yes’ and a ‘no’, France is in the grips of a chaotic day of ‘solidarity under duress’ whose consequences for 29 May seem hard to foresee.

News that parliaments in Germany, Austria and Slovakia have approved the constitution treaty is tempered by the results of the latest poll from the Netherlands, and a growing awareness of the possible uncertainty of forthcoming votes in Denmark, Poland and Ireland (at this stage the Czech Republic has still to decide on whether to have a referendum). It is taken as read by all concerned that the constitution faces a major obstacle in the UK referendum to be held in 2006.

There is no question about it: the vote in France on May 29th will be crucial for the future of the EU constitution. This is not simply because France is a ‘big country’, or because France is a ‘historic member’ of the union: it is because of the potential domino effect of a ‘no’ vote

Polls throughout March and into early April showed the French as likely to reject the constitution. From mid April on the ‘yes’ vote has made a comback, but the latest polls which are still pretty-much neck and neck, suggest the ‘no’ vote may be staging a modest comeback.

The latest poll to be published – conducted by Ifop for Wanadoo, showed that 54 percent of 1,016 people surveyed on May 12 and May 13 plan to say ‘no’: four points higher than in a similar survey held May 3 and 4. On the other side of the balance sheet a TNS-Sofres poll conducted for Le Monde on May 9 and May 10 put support for the treaty at 52 percent. Neither survey has a margin of error.

So we are, at present, and as I suggest in the title, ‘hanging in the balance’.

The French situation can only be complicated by today’s fiasco of ‘national solidarity’ . Traditionally the Monday of Pentecost is a bank holiday in France. This year prime ministre Raffarin – following the ‘heatwave of shame’ two years ago – proposed supressing the holiday and devoting the extra tax revenue accrued (estimated at over 2 billion euros) to the crisis-wracked health system.

The response of the French citizenry to this call has been anything but unanimous. According to the Independent:

Unions for teachers, and workers in railways, national and local government offices and public transport in Paris and 89 other cities, have called for a strike.Many left-wing town halls have declared a day off.

“Some large private companies have given their employees a day off and will pay the “solidarity” charge from their profits. Others will close but deduct one day from the stock of “rest days” accumulated by employees by way of the 35-hour working week”.

A left-wing parents’ organisation has urged its members not to send their children to school. So some schools will have classes without teachers; others will have teachers without classes. And some will have teachers and pupils, but no one in the canteen to make lunch. Overall, according to a poll for the newspaper Ouest-France, 55 per cent of French people intend to take a day off work today.

As I say, the impact of this on the final vote is hard to foresee, but it is unlikely to be a plus factor.

Meanwhile the FT reports today that a ‘yes’ vote in the Netherlands seems to be far from guaranteed, with one poll cited showing 60 per cent were against the constitution – up from 53 per cent in April – whilst only 21 per cent were in favour.

Those of us who are in favour of the constitution may have been heartened last week by the fact that parliaments in Austria and Slovakia voted overwhelmingly to ratify the European constitution, and that a vote in the German lower house also approved the treaty. But it would be a serious, and possibly even mortal, blow to our constitution hopes if in general those countries who approve the constitution only do so by means of a parliamentary vote, whilst those with the possibility of expressing their views tend to vote against.

This is not an entirely impossible scenario, if, as I fear may happen, a French ‘no’ vote provokes the dreaded domino effect.

Details of the various arrangements for decision making in the different EU countries can be found here.

Perhaps the reference to the lyrics of Bob Dylan which opens this post, would also be a good way to close it:

“In the time of my confession, in the hour of my deepest need
When the pool of tears beneath my feet flood every newborn seed
There’s a dyin’ voice within me reaching out somewhere,
Toiling in the danger and in the morals of despair.”