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EU relations: Is Britain being braver than Switzerland?

The world watched in interest as Britain’s Prime Minister Teresa May gave a significant speech about Brexit on Wednesday, confirming that Britain would exit the EU single market in order to take back control of immigration.

EU relations: Is Britain being braver than Switzerland?
Theresa May has outlined her intentions for a 'hard Brexit'. Photo: Isabel Infantes/AFP
This ‘hard Brexit’ stance is a stark contrast to Switzerland’s recent decision to water down a publicly-voted initiative to limit immigration from the EU
 
Instead of imposing immigration quotas the Swiss parliament chose a ‘light’ solution which did not contravene the EU’s essential principle of free movement of people. In doing so they could maintain the country’s raft of bilateral agreements with the bloc.
 
The decision reached by the Swiss parliament in December after nearly three years of wrangling was deemed anti-democratic by some, since never before had a new law diverged so far from the text of an initiative approved by the public in a legally-binding referendum.
 
But parliament defended itself by saying although the people voted for immigration curbs, they did not vote to end Swiss-EU bilaterals.
 
A contrast to the softly-softly tone employed by the Swiss government in the past few years, May’s tough talking on Wednesday was well received by some politicians in Switzerland who opposed the Swiss deal.
 
Speaking to Le Tribune de Genève Roger Köppel of the Swiss People’s Party – which spearheaded the anti-immigration initiative and opposed its ‘light’ implementation – praised the British leader. 
 
“She wasn’t personally in favour of Brexit. But she takes democracy seriously and applies the popular mandate, in contrast to the Federal Council,” he said.
 
May gained praise from left-wing politicians too, with Socialist Party MP Roger Nordmann telling the paper her position was logical. 
 
“Unlike the Federal Council she hasn’t claimed that we can have our cake and eat it too. To limit immigration she will come out of the single market,” he said.
 
But he added that May’s decision “indirectly backs up the position of the Swiss parliament which, for its part, also made another clear choice: to preserve the bilaterals.”
 
Reaction in the Swiss press was sceptical, with Le Temps saying the British PM's plans to come out of the single market but renegotiate some sort of trade agreement were a “daydream”.
 
“She will only take from the announced separation without giving compensation or concessions…. She imagines an island whose empire will be the world but without the unsolvable problems posed by the colonies of the old Empire with their undesirable migrants that London doesn’t know how to refuse,” it said. 
 
The Tages Anzeiger was also cynical, saying May had asked what sort of country we want to be and “unfortunately her reply was rather sour”.
 
Brexit does not give her a mandate to change the direction of the nation, it said. 
 
“Yes the people voted. But not about all the things that May sells as the future of the country.”
 
May followed her Brexit speech by travelling to Switzerland to speak at the World Economic Forum in Davos on Thursday.
 

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ENERGY

How European countries are spending billions on easing energy crisis

European governments are announcing emergency measures on a near-weekly basis to protect households and businesses from the energy crisis stemming from Russia's war in Ukraine.

How European countries are spending billions on easing energy crisis

Hundreds of billions of euros and counting have been shelled out since Russia invaded its pro-EU neighbour in late February.

Governments have gone all out: from capping gas and electricity prices to rescuing struggling energy companies and providing direct aid to households to fill up their cars.

The public spending has continued, even though European Union countries had accumulated mountains of new debt to save their economies during the Covid pandemic in 2020.

But some leaders have taken pride at their use of the public purse to battle this new crisis, which has sent inflation soaring, raised the cost of living and sparked fears of recession.

After announcing €14billion in new measures last week, Italian Prime Minister Mario Draghi boasted the latest spending put Italy, “among the countries that have spent the most in Europe”.

The Bruegel institute, a Brussels-based think tank that is tracking energy crisis spending by EU governments, ranks Italy as the second-biggest spender in Europe, after Germany.

READ ALSO How EU countries aim to cut energy bills and avoid blackouts this winter

Rome has allocated €59.2billion since September 2021 to shield households and businesses from the rising energy prices, accounting for 3.3 percent of its gross domestic product.

Germany tops the list with €100.2billion, or 2.8 percent of its GDP, as the country was hit hard by its reliance on Russian gas supplies, which have dwindled in suspected retaliation over Western sanctions against Moscow for the war.

On Wednesday, Germany announced the nationalisation of troubled gas giant Uniper.

France, which shielded consumers from gas and electricity price rises early, ranks third with €53.6billion euros allocated so far, representing 2.2 percent of its GDP.

Spending to continue rising
EU countries have now put up €314billion so far since September 2021, according to Bruegel.

“This number is set to increase as energy prices remain elevated,” Simone Tagliapietra, a senior fellow at Bruegel, told AFP.

The energy bills of a typical European family could reach €500 per month early next year, compared to €160 in 2021, according to US investment bank Goldman Sachs.

The measures to help consumers have ranged from a special tax on excess profits in Italy, to the energy price freeze in France, and subsidies public transport in Germany.

But the spending follows a pandemic response that increased public debt, which in the first quarter accounted for 189 percent of Greece’s GDP, 153 percent in Italy, 127 percent in Portugal, 118 percent in Spain and 114 percent in France.

“Initially designed as a temporary response to what was supposed to be a temporary problem, these measures have ballooned and become structural,” Tagliapietra said.

“This is clearly not sustainable from a public finance perspective. It is important that governments make an effort to focus this action on the most vulnerable households and businesses as much as possible.”

Budget reform
The higher spending comes as borrowing costs are rising. The European Central Bank hiked its rate for the first time in more than a decade in July to combat runaway inflation, which has been fuelled by soaring energy prices.

The yield on 10-year French sovereign bonds reached an eight-year high of 2.5 percent on Tuesday, while Germany now pays 1.8 percent interest after boasting a negative rate at the start of the year.

The rate charged to Italy has quadrupled from one percent earlier this year to four percent now, reviving the spectre of the debt crisis that threatened the eurozone a decade ago.

“It is critical to avoid debt crises that could have large destabilising effects and put the EU itself at risk,” the International Monetary Fund warned in a recent blog calling for reforms to budget rules.

The EU has suspended until 2023 rules that limit the public deficit of countries to three percent of GDP and debt to 60 percent.

The European Commission plans to present next month proposals to reform the 27-nation bloc’s budget rules, which have been shattered by the crises.

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