Tag Archives: France

French Referendum: Italian Bonds Hit

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What, you may ask, has Italian government debt got to do with the French ‘no’ vote: everything would be my answer. (If you want to know more about this, thumb down my euro posts). The lack of a convincing advance towards political union makes Italian government debt riskier, so they have to pay more interest. This is, at present just a small breach, but it is one which is widening, and I fear this is the point at which the euro dyke will eventually breach:

“The euro hit a fresh 7-month low against the dollar and Italian government bonds came under strain on Monday after French voters gave a decisive thumbs-down to the proposed European Union constitution…………….The strains the French vote could have on the euro zone were reflected in government bonds. The spread on Italian BTP bonds over German debt touched 23 basis points, the highest level since November 2002, as so-called peripheral euro zone bonds suffered.”

The problem is that the markets have now ‘wised up’ to the problem, and will now be tracking Italian government debt as an issue in itself.

Now For The Double Whammy

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Actually with the critical ECB meeting looming on Thursday, it could in fact be more like a ‘trifecta’ than a ‘double whammy’. Anyway, however you classify things, on Wednesday it will be the turn of the Netherlands. My impression is that the politicians don’t know quite how to respond.

Incidentally, with so much news coming in so fast, we will be directing most referendum information posts to our other page: A Few Euros More.

According to De Telegraaf Dutch Prime Minister is ‘disappointed’:

Prime Balkenende “has been disappointed” by the French ‘ no ‘ against the European constitution. He stated he had rather expected a positive result on Sunday evening. Balkenende called Dutch voters to vote ‘yes’. We should not our laws to be made by the French.

Frans draws our attention to an interesting post on the Dutch blog Steeph, and also writes:
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If they say no

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People will vote no for many different reasons, some for opposite reasons. But it seems clear to me some complaints will be shared by nearly all no voters, as well as many yes voters. Namely, that the EU is undemocratic, that the elites don?t care what the people say, that integration has been pursued without any input from them. Furthermore, I think an appropriate reaction to defeat would be humility. Therefore I think the proper way to rewrite the constitution would be to discard with most of the expansions of the EU’s powers, and as a side dish to introduce more robust measures to make the EU more democratic and accountable. This seems like the right thing to do, and also like a politically wise thing to do. It would make it likelier that people would vote for it, wouldn’t be that vulnerable to criticism that you rerun the vote and ensuing bitterness and still get the important things from this constitutions passed

If they’d scrap language that would invite judicial activism too, I myself could vote for it with enthusiasm.

While it’s not unthinkable that they’d actually do what I’ve suggested, I wouldn’t bet on it. More likely, they’ll either have a new IGC and make some less substantial changes to the constitution, or they will just give up for a few years. Neither scenario strikes me as worse than a yes vote.

What would be worse is if they give up and then go back to IGCs without any referendums or conventions, but I don’t think they could get away with it. In a sufficiently long run I’m sure they won’t, but heightened contradictions will be a mixed blessing. One dismal scenario would be for the French government to promise never to let Turkey in, and then rerun the referendum without changes, which would also be worse, at least if it succeeded, but again I don’t see it as likely.

Blogging The French Referendum

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Update I: Participation rates at 19:00 have just been released: 66,24 %. This means that it will surely clearly surpass the Maastricht final participation of 69,69 %. The poll estimates are talking about a final participation of 75%. This is big for a topic which many said was ‘abstract’. In Spain, the particpation was in the mid forties. The majority of polling stations close at 20:00 (in 40 minutes) but in Paris and Lyon they close at 22:00.

Well it’s a beautiful hot & sunny spring day here in Barcelona. I’ve got my web-radio tuned to France Inter (France Info) and I’m working quietly away updating some things on my website. I think today is an important day for Europe, and I’m going to be blogging live as the news comes in.
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The Mysteries of Growth: France & Germany

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The latest data on French household spending show that it rose rather faster than expected in April. This suggests that consumer spending is still supporting economic growth in sharp contrast with the pattern in Germany. In Germany the domestic economy actually *contracted* in the first quarter. True the German economy grew, but this was due exclusively to the export sector. So while the German domestic economy has been struggling France has been one of the eurozone’s best performing economies, with consumer spending and a booming housing market supporting growth. The French consumer is, it seems, considerably more robust than the German one.

So the big question is why the difference? They are both economies which according to the criteria of the Lisbon agenda are badly in need of reform. My own view, almost inevitably, is that this might well have something to do with the differing demographies of the two countries. Fertility is much higher in France – at nearly replacement rate – and over the years France has had a lot more long term immigration. Surely other factors are important: but which ones are they? Any constructive suggestions anyone?

Le Petit ‘Non’

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Well, if you believe Times (and after last weeks episode with the Independent I believe no-one), le petit ‘non’, like its equivalent le petit mensonge, is not all that serious after all. According to the Times, Britain is working with other European states to draw up plans to keep the European Union constitution alive if there is a narrow ?non? vote in France next week. Just a soupcon of ‘no’ will, in the end ‘help the medicine go down’.

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Barroso Has No ‘Plan B’ Ready

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The EU Observer has the following:

The President of the European Commission has called for a French yes to the European Constitution, pointing out that there will not be a “plan B” if France rejects the treaty next week……….But Mr Barroso asserted there was no plan B in case the French rejected the treaty.
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French Referendum: No Vote On The Rebound

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The ‘No’ campaign seems once more to have regained the lead in the run-up to France’s referendum on May 29, with French voters apparently ignoring all warnings about the damage that would be caused by rejection of Europe’s constitutional treaty.

One explanation for this may be the fact that leading politicians of the left – like Jacques Delors and Laurent Fabius – have given the impression that a ‘no’ outcome would lead to a probable ‘renegotiation’ of the treaty, with an outcome more favourable to French interests. The latest opinion polls show that an increasing proportion of respondents say France could renegotiate a better treaty after a No vote. According to the Ipsos poll cited below, nearly 62 per cent of respondents now hold this opinion.

Confounding pollsters, pundits and politicians alike, public opinion in France has swung back behind a no vote to the new European constitution, say three surveys published yesterday.

Less than two weeks before France’s May 29 referendum on the treaty, the polls by the TNS-Sofres, Ipsos and CSA agencies for Le Monde, Le Figaro and Le Parisien newspapers showed support for the no camp, trailing since the end of April, had bounced back to between 51% and 53%.
TheGuardian