Three other components of the deal now need to be settled:
1. The political share out of the top jobs. Already, Martin Schulz has staked his claim to be re-appointed as President of the European Parliament – a role that will give some influence on the conduct of economic policy and which could be bolstered if the Socialists decide to go for the Chair of ECON. As the largest national delegation by some way (31 - well ahead of the 27 strong German delegation or 20 British Labour MEPs), Italian Prime Minister Renzi may be emboldened enough to demand the Chair of ECON. That could tilt the balance of economic power significantly.
2. The policy dispute between Left and Right remains sharp – and highly focussed on the degree of flexibility within the Stability and Growth Pact (SGP). The next Commissioner of Economics – the new `Olli Rehn’ – will have a vital role in such judgements so the particular personality will be another big choice.
3. “Reform”: everyone in the EU is in favour of this. But what do they mean by the term? The euro area certainly wants a `completion of the single market’. That requires – and therefore means for them – more integration. Banking Union is now enacted and `merely’ has to be implemented. `Capital Market Union’ is now coming over the horizon as policy-makers realise that credit to the economy will now to have to come from `market finance’ – as shadow banking is now being re-labelled. At last week’s Brussels for Breakfast – the 100th event, see my blog – I identified seven new items of detailed financial regulation that shift effective power to the European level. These were announced during the last four weeks alone and were just for the banking industry. This is the practical meaning of reform.
But this is the process that 54 `leaders’ of British finance wrote to the Sunday Times to demand that, in some way, Britain should dis-engage from. The lack of comprehension of the practical reality is palpable. Tragically for Britain, their definition of “reform” seems to be the exact reverse of most of the other 27 members of the EU. Will the now-inevitable Summit train crash of Prime Minister Cameron’s policies be a wake-up call? It may not be loud enough even now.
Graham Bishop - Consultant on EU Integration - Political, Financial, Economic, Budgetary