French and German economists have urged leaders in Europe to reform banking and financial sectors to prepare for another economic crisis.
Travelling to Paris, Berlin and Brussels they say the current focus on Brexit means potential problems in these areas are not being addressed during a period of economic stability.
One of the experts behind the new ‘euro area reform’ paper, Agnès Bénassy-Quéré of the Paris School of Economics, said: “The problem is today that concerns have moved away from monetary and financial solutions to security and Brexit but the euro area is not out of the woods.
“Today we do not face too many risks but that is exactly when we must take the opportunity of making reforms.
“We must do it when we are in an upturn, not wait for a downturn.
“Doing nothing is fine until the next crisis, but it’s naïve to think there won’t be one. Imagine, for example, there is a new banking crisis in Italy, where the debt to GDP ratio is very high – there could be a panic in the markets and then debt restructuring, triggering a major financial crisis.”
Ms Bénassy-Quéré said politicians have shied away from crucial questions of banking and monetary reforms as they may seem complex or unpopular.
“If the president suggests that another banking crisis may be looming or that the euro may burst it might have a negative political impact,” she said.
The economists hope to re-inject interest in the subject of EU reforms. A plan put forward by President Macron last September, which included calls for EU states to produce a ‘shared roadmap’ for change and organised public debates, has yet to gain any traction.
More about the economists’ paper, which includes ways to minimise risk in the banking sector and outlines ways to reduce the impact of a financial crisis, can be found here.
Brexit talks about the nature of a transition period for the UK following its departure from the European Union are set to begin, as legal challenges to secure expats’ rights and challenge the referendum result continue.
Talks on the transition period, including expat rights, should begin after the EU’s General Affairs Council on January 29 when new negotiating directives are to be adopted.
The Guardian claims to have seen a draft which insists that free movement of EU citizens into Britain and of Britons to the EU will continue until at least the end of 2020, with the ‘deal’ for expats to apply to anyone moving before then. Discussion of the ‘future relationship’, including trade, may start after the European Council summit on March 22-23.
Legal challenges are ongoing, including the case led by Bordeaux lawyer Julien Fouchet who hopes the EU’s general court may make a decision this month into whether or not his case will go on to a full hearing. He is arguing on behalf of a group of British expats including Second World War veteran Harry Shindler, who lives in Italy, that the referendum was illegal as it excluded long-term expats.
Britons from the Brexpats: Hear Our Voice (BHOV) campaign group, which has many members in France, have mounted new court action in the Netherlands to help British expats retain their EU citizenship and so avoid having to apply for residence cards or having to rely on a ‘good’ Brexit deal.
They told the Amsterdam district court that the Dutch government, and subsequently the rest of the ‘EU27’ including France, was wrong to take the view that Britons will cease to be EU citizens after the UK.
BHOV’s lawyer, Christiaan Alberdingk Thijm, said: “The question is what does Brexit really mean for their EU citizenship rights? We say there are very good arguments that these rights are inalienable and should remain in force.”
A decision by the Amsterdam court on whether to refer the case to the European Court of Justice for a definitive ruling on this question is expected by February 7.
Mr Alberdingk Thijm believes there is “no strong indication” that the judge will refuse it, though he says the outcome is “difficult to predict”.
Fresh calls for a second referendum on the terms of the exit deal, raised by Labour peer Lord Adonis and former Prime Minister Tony Blair in January prompted a surprising response from Brexit campaigner Nigel Farage who appeared to briefly suggest he supported a second referendum vote where he expected greater support for leaving.
He rowed back on the comments just over a week later.
EU Council president Donald Tusk and commission president Jean-Claude Juncker both recently said that the EU’s “hearts” and “our door” are still open to a U-turn.
