Brexit latest briefing - Wall Street Journal

4:02 AM EST APR 29, 2016


The past week has been dominated by the fallout from President Barack Obama’s intervention in the U.K. referendum debate. Mr. Obama stepped in on the side of those arguing for the U.K. to stay in the European Union, arguing the U.K. would go to “the back of the queue” when it came to negotiating a trade agreement with Washington.

More experts weighed in on the economic arguments about exit. With polls showing the economic issue tending to favor the Remain campaign, those urging Brexit were expected to try to switch the debate toward immigration, which polls suggest is a stronger issue for them. Home Secretary Teresa May stepped in to the debate on the side of Remain, saying the U.K. shouldn’t quit the EU but should leave the European Court of Human Rights.

Here, in a nutshell, are the issues that dominated the past week.
* Obama Drama
So he did it and came out for Bremain, saying “I don’t believe the EU moderates British influence in the world–it magnifies it.” He elaborated later that being at the back of the queue meant that a U.S.-U.K. trade deal could take as long as a decade to come into force. Some of the subsequent debate focused on whether a U.S. president would really say “queue” and whether that meant his talking points were written in Downing Street.
Before Mr. Obama spoke, London Mayor Boris Johnson suggested the president might be, as a part-Kenyan, influenced by his “ancestral dislike of the British empire.” That kicked off a whole storm of its own. Many people for Leave argued that the president had misunderstood the issue, which was about getting back British sovereignty.
The leading Democratic presidential contender, Hillary Clinton, backed the president. Republican contender Ted Cruz said the opposite of Mr. Obama, writing in The Times that the U.K. would be at “the front of the queue” for a trade deal. Here’s Simon Nixon’s take.

* May Courts Controversy
Home Secretary Theresa May spelled out her reasons for staying in the EU. It was her questioning of British membership of the European Court of Human Rights that drew the most headlines. The ECHR, based in Strasbourg, is not an EU court, and the U.K. is subject to it as a signatory of the European Convention of Human Rights.
While many get the two mixed up, the EU’s top court is the European Court of Justice, based in Luxembourg, with which Ms. May has less of a problem.
There’s some irony here in the sense that the ECHR (unlike the EU) is a British creation dating back to 1950, born of the pan-European vision of Conservative Party icon Winston Churchill.
The speech revived the debate about whether the U.K. could leave the ECHR but not the EU. Here’s Stephen Booth’s fence-sitting response.


* Better Off Out: Economists
Most economists who have spoken out on the question say the U.K. is better off in the EU. But this week a group of eight British economistsput their case for leaving, saying growth will be faster outside than inside. The full report is here.
Their vision of a faster-growing post-Brexit Britain is one where the country has embraced the free market. The economists depict the EU as a protectionist bloc, and believe exit will allow the U.K. to lower tariffs on imports, making goods cheaper. Money saved from the contribution to the EU budget should be used to cut income taxes. There would be a bonfire of regulations.
Could such a vision come to pass? We asked this question a couple of weeks ago.


* Better Off In: Economists
The latest organization to say it would be damaging is the Organization for Economic Cooperation and Development, the Paris-based club of industrialized countries. Its boss Angel Gurria said “Leaving Europe would impose a Brexit tax on generations to come,” saying the losses were already starting. The central scenario had a loss by 2030 of £3,200 a year for every household. Here’s the paper.


* No Easy Way Out
In this week’s Brussels Beat, we look at how legally the U.K. might go about leaving the EU. In broad terms, there are two ways: one is hard and the other is a nightmare.
Here for the pro-EU Centre for European Reform, Agata Gostynska-Jakubowska drills deeper into the questions that surround Article 50 of the Lisbon Treaty, the clause that most likely would have to be used to negotiate the U.K.’s departure.
 



Eurozone economy back to pre-crisis level - Financial Times

Eurozone GDP returns to pre-crisis levels
Strong French performance helps single currency area beat growth expectations

The eurozone economy began the year in stronger fashion than expected, as gross domestic product finally surpassed pre-crisis levels and grew by 0.6 per cent in the first quarter, helped by a relatively robust performance by France.

The eurozone figure, released by Eurostat, the European Commission’s statistical arm, showed growth at the fastest rate since the beginning of 2015, as overall economic output reached its highest level, above the first quarter of 2008.
It is also the first time since the beginning of 2011 that growth in the single currency area has outpaced economic expansion in the broader EU and the UK, which recorded growth of 0.5 per cent and 0.4 per cent respectively.


The British government, which is facing an In/Out referendum on EU membership on 23 June, until recently emphasised the UK’s status as the fastest growing economy in the G7.
Analysts had expected growth of about 0.4 per cent in the eurozone — only a slight improvement on the 0.3 per cent figure recorded for the final three months of 2015.
The initial eurozone and wide EU GDP figures do not provide a breakdown of performance by member states.
However, national data from France showed that the region’s second-largest economy fuelled some of the momentum for the improved recovery.
France’s economy grew 0.5 per cent, outstripping economists’ expectations and adding to a recent run of improving fortune for Socialist President François Hollandein the build-up to next year’s elections.

The Spanish economy also beat expectations, growing by 0.8 per cent in the first three months of the year, despite the lack of a government and the prolonged political uncertainty.
The growth rate was the same as in the previous two quarters, defying expectations of a slight weakening of growth this year. Spain’s central bank had predicted growth of 0.7 per cent in the first three months of 2016.
In depth
Eurozone economy

News and analysis of the single currency bloc’s fragile recovery as it attempts to regain competitiveness in the wake of the sovereign debt crisis and its struggles with austerity
Friday’s preliminary figure for France is above the 0.3 per cent growth that the country — the eurozone’s second-biggest economy — recorded during the past three months of 2015. It was boosted by the biggest increase in household spending since 2004, according to Insee, the official statistics bureau.
While the figures will increase confidence in the region’s recovery, difficulties remain — including inflation, which fell in the year to April to minus 0.2 per cent from zero the previous month.
Eurostat said the core measure of inflation, which excludes items with more volatile prices such as food and energy goods, also fell — dipping from 1 per cent in March to 0.8 per cent. Both the headline and core figures were the lowest since February this year.
Unemployment remains in double figures, although it fell from 10.4 per cent in February to 10.2 per cent in March.

Economists welcomed the French growth data, which they said would boost Mr Hollande’s standing. “There is a stronger situation in the labour market and that will create strong momentum this year,” said Philippe Waechter, chief economist at Natixis Asset Management.”
He added: “It’s perfect timing for Hollande.”
The latest data come as Mr Hollande, the least popular president in France’s modern history, according to recent surveys, is trying to claw back support as he and his party prepare for next year’s presidential contest.
This week data showed that French unemployment in March saw the biggest monthly fall in 15 years.
The figure, the sharpest fall since 2000, more than made up for an increase in the jobless numbers in February and brought about the first quarterly fall since well before Mr Hollande took office in 2012.