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Analysis

Brexit marginalises UK just as EU starts to get act together

by Stewart Fleming | 01.06.2017

Brexiteers have been blithely peddling the line that by leaving the EU the UK is finally cutting itself off from an economically and politically dysfunctional neighbour.

Until a couple of months ago, with populist parties in France and the Netherlands threatening the established political order, this line of argument looked at least plausible. How quickly things have changed, amidst early signs that the EU is beginning to get its act together.

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According to a recent International Monetary Fund (IMF) forecast, economic recovery is taking root across the EU just as the UK’s post-Brexit economy is stumbling. In the first quarter of the year we took the wooden spoon (alongside Italy), as the slowest growing of the Group of Seven advanced economies.

But the decisive event is political, not economic, namely Emmanuel Macron’s election as French president. Even after the charismatic liberal’s stunning victory, the conventional wisdom was that he would flounder because he was leading a new political party with no established parliamentary power base. He would, therefore, end up politically impotent after this month’s parliamentary elections, trapped in a so-called “cohabitation” with his opponents.

However, swept along by “Macronmania”, polls now suggest Macron is heading for another dramatic political victory in the National Assembly elections. Against all the odds, he would then be in control of the considerable powers the French constitution bestows on the Elysee Palace’s occupant.

The implications for Europe are not to be underestimated. With the French economy on the mend and Macron likely to be in a position to implement unpopular growth-enhancing reforms, we could soon be witnessing the re-emergence of the “Franco-German motor,” the historical driving force of EU integration.

Last week, at the G7 leaders’ summit, Macron signalled his foreign policy intentions in a moment caught by the television cameras. He studiously snubbed a greeting from Donald Trump and made a bee-line for Angela Merkel.

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If Macron is indeed able to push forward reforms and Merkel is re-elected as German chancellor in September, she will at last have a French president she can do business with. That could kick-start the far-reaching political reforms the EU so badly needs.

Brexit is playing into this scenario too. Smaller countries like the Netherlands which often used to rely on their relationship with the UK, one of the EU’s big three, are now looking around for different partners. Meanwhile Eastern European countries such as Poland are rethinking their policy of staying out of the single currency. As one former IMF official responsible for the region remarked last month, they want now to be sure they are in the room where all the most important decisions are likely to be taken.

It is not just in relation to the EU’s internal affairs that change is in the air. Significantly, even as Washington is raising doubts about its continued commitment to the Paris climate change accords, the EU has, independently, agreed to work with China to keep the accord on track

Meanwhile, judging from hints from the White House, the EU also now looks well ahead of the UK in the queue preparing to negotiate a free trade deal with the Trump administration. Indeed, it could be that we are surrendering our seat at the EU table just when Europe sees an opportunity to reassert its global influence.

Edited by Hugo Dixon

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