This Week in Europe: Italian Recession, EU-Japan FTA and more

, by Pascal Letendre-Hanns, Radu Dumitrescu

This Week in Europe: Italian Recession, EU-Japan FTA and more

Members of the TNF team recount big events from Europe from the past week, and point attention to news that may have passed notice. What did we miss? Comment on our Facebook page at !

Japan-EU FTA comes into effect

This week the Free Trade Agreement between the EU and Japan came into force. Known as the ‘cars for cheese deal’ (in reference to key negotiating priorities of both sides), the deal is both the biggest FTA the EU has negotiated and the biggest in the world. Japan has committed to removing 97% of duties on imports from the EU, while the EU has agreed to remove 99% of duties on imports from Japan. It is estimated that EU companies exporting to Japan will save around €1 billion in scrapped duties when all provisions of the agreement are met. It is also the first trade agreement finalised by the EU which includes environmental commitments linked to the Paris Agreement targets.

European Parliament votes to recognise Guaidó

MEPs voted by a large majority in favour of recognising the leader of Venezuela’s National Assembly, Juan Guaidó, as the country’s legitimate leader. A vote of lawmakers in Venezuela approved Guaidó as interim President amid a worsening political crisis and since then a number of other countries around the world have supported the claim - including Argentina, Chile, Peru and Canada. 439 MEPs voted in favour of recognition, with 104 against and 88 abstentions. For now the Council, however, has not followed suit as a result of continuing opposition from M5S, one half of the governing coalition in Italy. Individual EU states such as the UK, France, Spain and Portugal are therefore likely to go ahead with recognition while others offer positions in a similar direction even if they fall short of outright support for Guaidó.

Italy drops into recession

Italy’s economy has struggled to make any headway since the new populist government came to power and this week it was announced that the country had entered a technical recession - two consecutive quarters of negative growth. Growth in Q3 2018 was -0.1% while Q4 dipped slightly further to -0.2%. The row with the Commission over the budget and the lax approach of the Italian government to Italy’s economy have both been blamed for the downward trend. Combined with slowing (though positive) growth in Germany and France, the eurozone ended up with an unimpressive 0.2% growth for the final quarter of 2018. In better economic news, eurozone unemployment has stayed down at 7.9%, the lowest rate since the height of the financial crisis in 2008 - though again Italy posted of the highest unemployment rates.

UK MPs vote to send May back to Brussels

On Tuesday night, UK MPs voted on a series of propositions concerning Brexit. Most were rejected, reflecting how little consensus there is in the UK Parliament, but two won moderate majorities. The first expressed total opposition to the backstop element of the UK-EU Withdrawal Agreement, designed to ensure there would be no hard border in Ireland under all circumstances. It also declared that the backstop would have to be replaced by ‘alternative arrangements’. The UK government voted in favour of this, effectively voting against the deal it had negotiated with the EU, and so is going back to EU leaders to try and win some changes to the backstop. EU leaders have been unanimous so far in their opposition to changing the backstop unless the UK can say exactly what should replace it. The other idea that received favour from UK MPs was an opposition to a No Deal Brexit. Though it was not legally binding, it reflects a commonly held view that a majority of MPs would, if absolutely necessary, take action to stop No Deal.

Radical European Left nominates its candidates

The European Left Party, part of the GUE/NGL group, chose Violeta Tomic and Nico Cue as its lead candidates for the European elections in May. Tomic is an MP in Slovenia, part of the Levica party, and Cue is a former secretary general of the Metalworkers’ Union of Belgium. The group’s leader, Gregor Gysi, lauded his group for having chosen a representative of the Eastern half of the continent, where people have been fighting for the workers and their unions. The Left party, acting within GUE/NGL, will promote pacifism and redistribution of wealth to the poorer classes, not to mention climate action. This week, Greek PM and Syriza leader Alexis Tsipras vowed that his party will stay within the leftist GUE/NGL group after the EU elections, after having been courted by the S&D group.

Nearly a third of British businesses plan to leave

A survey of the Institute of Directors published this week shows that 29% of British businesses plan to move at least some of their operations overseas due to Brexit. After survey 1,200 company directors, the Institute indicates that while 16% of them have already begun relocating or are certain to do so in the future, another 13% are “actively considering doing so.” 40% of exporters and 39% of importers also plan to relocate. Among the firms that plan to move, the EU is a top choice by a large margin.

Hungary’s Orban rejects Salvini’s eurosceptic alliance

Last month, Italy’s deputy PM and leader of the far-right League Matteo Salvini argued that Italy and Poland should join forces in order to reshape Europe, forming a group in the European Parliament. At that time, Hungary’s PM and strongman Viktor Orban supported the initiative, as he viewed Italy and Poland as partners in his anti-immigration policies. This week, however, state secretary Szabolcs Takács said that Hungary’s ruling Fidesz will stay in the European People’s Party (EPP). Despite their similar take on migration, Takács said that Orban and Salvini had not met and did not plan to in the foreseeable future. “What we would like to see is that the EPP remains where it should be remaining, the original values, ideas, Christian democracy,” said Takács, who also backed Manfred Weber’s candidacy to the presidency of the Commission.

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