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Brexit deal leaves much unchanged, institutionally

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The writer is an FT contributing editor

The shapes of the institutional arrangements that will govern relations between the UK and the EU after Brexit are now becoming more apparent, and in some ways those shapes are rather familiar. Take the framework of the trade and co-operation agreement. There is a substantial amount of continuity.

The entity that will govern the agreement will be a “partnership council” supervised jointly by a UK minister and a European commissioner. This council can make decisions that will bind both the UK and EU. Its deliberations can be confidential, if the parties choose.

The council will spend half its time in London and half in Brussels. There will also be a secretariat, based in London and Brussels.

If one of the complaints that led to Brexit was that decisions that bind the UK could be made behind closed doors in Brussels, then this is still possible, and may be possible 50 per cent of the time. In one way, this is a half Brexit, not a full one.

And in respect of these legally binding decisions, there is even less of a role for the UK parliament than there was with EU legislation. Before departure, legislation implementing EU directives had to go through the UK parliament, either as statutes or statutory instruments. 

Now, the UK parliament only has the right to be “informed” of the decisions. This is no doubt partly because the UK wants the same limited role for the European parliament, and one legislature could not be included without the other. But the agreement provides no substance for the claim that the UK parliament is “taking back control”.

As before, what binds the UK will be the subject of often-confidential discussions in London and Brussels between UK ministers and the European Commission. Only the labels on various actual and metaphorical doors will be changed — and sometimes those doors can be closed.

On dispute resolution, there is also scope for less openness than before. The resolution of disputes and the arbitration process is subject to absolute and discretionary rules of confidentiality. At least with the Luxembourg court, one could usually see cases in open court. But now, as with the decision-making process, dispute resolution can take place behind closed doors too.

There are, of course, substantial changes on the institutional and legal planes. The decisions of the Partnership Council will only bind the UK and EU as a matter of international law, and will not apply to any other persons. The special legal regime of the EU, with its direct effect on rights enforceable by citizens and the direct applicability of certain laws, comes to an end in the UK.

But, as I have set out elsewhere, the agreement is expressly not a once-and-for-all settlement of Britain’s Brexit future. It is designed to be dynamic, and new supplementary agreements and specialist oversight committees are expressly envisaged. There will also be substantial reviews every five years.

Over time, therefore, the agreement could lead to a relationship with a permanent staff providing ongoing discussions. Even policy areas that are not currently covered, such as financial services, are only a “supplementary” agreement away from being covered. A Martian looking down on people in Whitehall and Brussels may not notice a lot of difference from pre-Brexit.

Taken together with the withdrawal agreement — which provides for financial contributions, the Irish border and the rights of UK and EU citizens — the new deal means the UK has swapped the two treaties of the European Union for two new agreements that govern many of the same things. This is now subject to a potential five-year cycle of review and amendment that neatly matches the five-year terms of the European Commission and the European parliament, and the usual five-year term of the presidency of the European Council.

Even the substantial changes may not have much effect. EU law may not apply directly but it will still shape what the EU can agree and not agree to. So every decision and measure made by the partnership council will still be limited by EU law, but at one remove.

In terms of policy coverage, much has been lost. Manufacturers of German cars and others will welcome the tariff-free regime, while UK service providers face new barriers. The ongoing free movement of goods is not matched by other freedoms integral to the single market, such as freedom of movement.

And in terms of frictionless trade, the UK has not secured a free-trade area 10 times the size of the EU, as promised by a former Brexit minister, but somehow ended up with a free-trade area smaller than the UK, with trade frictions down the Irish Sea.

The new relationship between the EU and the UK is significantly different from what went before — this is certainly not Brexit in name only. 

But nor is it an entirely fresh start for the country. The new executive institution looks like the old executive institutions. Many policy areas remain aligned, and there can easily be alignments in other areas. The UK may have escaped “ever-closer union” but it now is within a framework designed to allow for an ever-closer relationship.



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Did US hiring accelerate in February?

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Did US hiring accelerate in February?

US hiring picked up markedly in February from the previous month, economists have forecast ahead of the monthly employment report that is due to be released on Friday.

After the country lost 227,000 jobs in December, hiring rebounded in January — albeit with a modest gain of 49,000 jobs — as the rise in coronavirus infections abated and vaccinations accelerated.

Economists polled by Bloomberg anticipate that the US will add 145,000 jobs in February, pushing the unemployment rate 1 percentage point to 5.3 per cent. If that forecast holds, it would mark the strongest pace of hiring since November.

The prospect of a resurgence was bolstered by data released last Thursday showing that filings for first-time jobless benefits fell to a three-month low in the week ending February 20.

The labour market stumbled in the final stretch of 2020 under the weight of the pandemic’s upswing in the autumn, which prompted tighter restrictions on businesses and social activity across the US.

The leisure and hospitality sector alone shed 597,000 jobs in December and January, according to labour department figures, whereas the January payroll gains were concentrated in government employment and professional and business services.

However, the outlook is brighter for the coming months, particularly with the expected passing of the Biden administration’s $1.9tn stimulus plan, which last week won the support of a large group of senior Wall Street executives, and further vaccination progress.

“US households appeared quite febrile at the end of 2020 as the cocktail of a worsening health situation, weakening employment and expiring fiscal aid weighed on private sector confidence and restrained mobility,” analysts at Oxford Economics said. “Fortunately, we see hope on all three fronts.” Matthew Rocco

Will eurozone inflation continue to rise?

Eurozone inflation hit its highest level since the start of the coronavirus pandemic in January, after five months of falling prices. On Tuesday the bloc’s statistics body will publish a preliminary estimate of February’s level, which is expected to continue the upward trend.

Many economists are predicting a steady rise over the spring on the back of higher energy costs, continuing supply chain disruptions that have raised costs for retailers and manufacturers, and the reversal of a VAT tax cut in Germany.

“For eurozone inflation, the only way is up,” said Carsten Brzeski, economist at ING, who forecast that headline consumer price inflation in the bloc would reach 1.3 per cent in February, from an 11-month high of 0.9 per cent in January.

Claus Vistesen, chief economist at Pantheon Macroeconomics, said a further increase in the price of oil — international benchmark Brent crude is up more than 30 per cent this year — could be the biggest driver of inflation in coming months.

A change in the inflation basket of goods and services is also at play. The 2021 basket reflects that people are consuming more food, where prices are rising, and less recreation activity, where prices are generally falling.

The European Central Bank has forecast that price growth will rise to 1.5 per cent in the fourth quarter this year before dipping to 1.2 per cent a year later — still under its target of below but close to 2 per cent.

“The ECB will not contemplate raising its policy rates until eurozone inflation expectations and wage inflation have increased substantially and persistently,” said Andrew Kenningham, economist at Capital Economics. “That is probably several years away.” Valentina Romei

Line chart of By date of forecast, % showing Economists revise up their eurozone inflation forecast for 2021

Can the copper bull run continue?

If, as the commodity market adage goes, the cure for high prices is high prices, where does that leave copper?

The world’s most important industrial metal, used in everything from electric vehicles to power cables, has risen more than 100 per cent from its pandemic lows in March last year.

Last week it hit a 10-year high above $9,500 a tonne before falling back as speculators piled in and a Chinese brokerage amassed a $1bn long position on the Shanghai Futures Exchange. 

A growing number of banks and brokers believe the bull run will continue and copper will go on to surpass its all-time high of $10,190 reached in February 2011. 

Citi and Goldman Sachs are both predicting big supply deficits for 2021 that would further drain already-low stockpiles of the metal, citing strong demand from China but also the rest of the world as the economic strain from the coronavirus pandemic eases. 

Unlike previous cycles, a dearth of “shovel-ready” copper projects means a flood of supply is not going to hit the market and send prices tumbling. If anything, even higher prices might be needed to spur production of low-grade ores in far-flung parts of the world where it is difficult to build a mine.

“It takes 15 years from discovery to navigating approvals to ultimately getting a development up and running in our industry,” Anglo American chief executive Mark Cutifani said. “So you can’t just wiggle your nose. It does need high prices, but it also needs time.” Neil Hume



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Europe’s AstraZeneca stockpile mounts as citizens snub jab

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After battling with AstraZeneca over shipment delays, and even casting doubt over its Covid-19 jab’s efficacy, EU countries are seeing stocks of the company’s shots pile up — unused.

As of Friday, France had administered 16 per cent of the 1.1m doses of the two-injection vaccine it received since the first delivery in early February, according to health ministry data. As of Thursday, Germany had given a little over one-fifth of the 1.45 million doses, about the same proportion as Italy, which has received over 1m doses. Spain has used just under a third of a total of 808,000 doses as of Friday.

The situation has prompted several European leaders to talk up the Oxford/AstraZeneca vaccine in recent days, with one French health ministry official even calling for a “collective rehabilitation campaign” to improve its reputation.

France has used little of its Oxford/AstraZeneca vaccine supply. Chart showing Total doses of Oxford/AstraZeneca vaccine in France vs doses administered.5.5% of the Oxford/AstraZenecadoses have been used as of Feb 24

German chancellor Angela Merkel acknowledged that there was “an acceptance problem with the AstraZeneca vaccine at the moment” that was slowing the jab’s rollout. In an interview with Frankfurter Allgemeine newspaper on Thursday, she urged people to keep an open mind about it: “All the authorities tell us that we can trust this vaccine.”

The tone is a change from only weeks ago when European politicians were engaged in an acrimonious battle with AstraZeneca over its deliveries and when French president Emmanuel Macron suggested the vaccine was “quasi-ineffective” on older individuals. Now that they have doses, however, EU governments face a sceptical public, in addition to logistical challenges and restrictions of their own devising.

Health experts have warned that the continent’s already sluggish rollout could be further hampered if uptake of the Anglo-Swedish company’s vaccine is not improved. The EU had inoculated only 6.82 per 100 people by Friday, compared with 28.6 in the UK, 20.4 in the US, and 91 in Israel, according to Our World in Data.

Chief among the reasons for the lower acceptance of the Oxford/AstraZeneca vaccine was a policy choice made by many countries to restrict its use for older people until more data on its efficacy became available. In France, that meant the shot is being offered only to people aged between 50 and 64 with comorbidities and healthcare workers, while Spain has advised it not be used on those older than 55 years old. Germany and Italy are offering the jab to everyone younger than 65. 

Health experts say negative headlines have damaged the vaccine’s reputation, bolstering the perception that it is a lesser option to BioNTech/Pfizer and Moderna jabs, which both rely on so-called mRNA technology and boast higher protection rates. A study suggesting the AstraZeneca vaccine was less effective against the variant that has emerged in South Africa caused healthcare workers’ unions in several European countries to demand that their members get the mRNA-based vaccines instead. 

The Oxford/AstraZeneca jab showed efficacy of between 62 and 70 per cent in clinical trials last year. That compares with more than 90 per cent effectiveness for the BioNTech/Pfizer and Moderna jabs. But all of them offer nearly full protection against hospitalisation and deaths.

“I don’t have anything against the AstraZeneca vaccine,” said Jérôme Marty, who heads a French doctors’ union. “But healthcare workers are often exposed to high viral loads in the hospital so they need the most effective vaccines that we have.” 

In France, which has for years had the world’s highest vaccine hesitancy, there were reports of hospital workers missing shifts and suffering strong side effects such as fever and muscle pain after being inoculated with the Oxford/AstraZeneca vaccine. It is often younger people who experience such side effects with the AstraZeneca shot since their immune systems mount a stronger response than older people, health experts say.

Weeks after the French president’s dismissive comments on the jab, France’s top vaccine adviser Dr Alain Fischer has been extolling its virtues on television, social media and webinars for hospital staff. 

France’s top vaccine adviser Alain Fischer: “For reasons that I find profoundly unfair, this vaccine has gotten relatively bad press in France” © Stephane de Sakutin/POOL/EPA-EFE/Shutterstock

“For reasons that I find profoundly unfair, this vaccine has gotten relatively bad press in France,” the paediatric immunologist told the press on Thursday. “It is effective. It is safe. It should be used without a second thought and without delay.” 

Fischer also referred to the results of a new study from Scotland, which has not yet been peer-reviewed, showing the Oxford/AstraZeneca shot lowered the chance of hospitalisation from four to six weeks after vaccination by 94 per cent after one shot. “If confirmed, these results would be excellent news”, he said, and could lead France to expand the usage to those aged over 65. Logistical problems in France have also meant doctors only started inoculating patients this week.

Spain is reviewing new data continuously to decide whether to change age restrictions on the jab. Health ministry official Silvia Calzón said on Thursday: “We are waiting for there to be more evidence so that we can make a decision with all the guarantees.”

Even Macron has become a convert. “In view of the latest scientific studies, the efficacy of the AstraZeneca vaccine has been proven,” he said after a virtual gathering of EU leaders. “If that’s the vaccine that’s offered to me, I will take it, of course.”

This story has been amended to use health ministry data on the French vaccination campaign rather than data compiled by the website Covidtracker.fr.



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French Greens given a grilling over meat-free school lunches

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Grégory Doucet, mayor of Lyon, said he had no inkling that the school lunches served up in the French city this week would put him at the centre of a political storm. 

But the decision by the environmentalist mayor that children should be offered just a single lunch option — one without meat — prompted immediate denunciations from French government ministers, and protests by farmers who responded by releasing herds of cows outside city hall. 

The ruling — which Doucet said he took for a limited period to avoid long queues for multiple menus that would bunch pupils close together during the Covid-19 pandemic — has set carnivores against vegetarians, town against country, and right against left. 

“It touches a lot of topics deeply rooted in French political culture,” said Vincent Martigny, politics professor at the University of Nice. “Everybody knows we should be eating less meat, but we’re still a very traditional food culture in France, quite conservative. If you don’t eat meat and drink wine, you’re not very French.” 

Doucet and his Europe Ecologie-Les Verts (EELV) , which took Lyon from the centre-right in local elections last year, say the row has more to do with June’s regional elections and the presidential and legislative polls due in 2021. 

“They’re targeting the ecologists because we’re the biggest threat,” Doucet told the Financial Times. 

Farmers released herds of cows outside Lyon city hall to protest against the removal of meat from school lunches
Farmers released herds of cows outside Lyon city hall to protest against the removal of meat from school lunches © Olivier Chassignole/AFP via Getty Images

Even so, a mini-campaign by some ministers in President Emmanuel Macron’s government to curry favour with conservative voters and paint the Greens as crazed ideologues quickly spun out of control and exposed divisions in the cabinet.

Gérald Darmanin, the hardline interior minister, denounced the Lyon Greens for what he called a “moralistic, elitist policy” to deprive working-class students of meat. Julien Denormandie, who holds the agriculture portfolio, leapt to the defence of farmers, calling the decision “shameful” and saying: “Let’s stop putting ideology on our children’s plates!”

Environment minister Barbara Pompili, however, said she was sorry to hear a “prehistoric debate” full of clichés about the supposed nutritional inadequacies of vegetarian food. Macron eventually had to tell them to stop disagreeing in public as he called for an end to the “idiotic” argument. 

The school meals controversy is the latest manifestation of a long-running debate in France and abroad over the environmental sustainability of meat consumption by an increasingly wealthy and numerous world population, given the land taken up by cattle and their greenhouse gas emissions. 

Doucet, a “flexitarian” who said he tried to limit his intake of meat and fish, has campaigned to reduce consumption of animal protein and provide more vegetarian meals in schools, but he said his immediate priority was to ensure the meat served comes from local farmers.

He also pointed out that Gérard Collomb, his centre-right predecessor as mayor, had made exactly the same decision for a single, no-meat menu acceptable to the largest number of school pupils during an early phase of the pandemic — and there had been no political backlash. 

“When we took the decision, we didn’t think for one minute it would lead to a political polemic,” Doucet said. 

Somewhat later than neighbouring countries such as the UK, France is in any case gradually coming to accept vegetarianism. The Michelin Guide this year for the first time awarded one of its prized stars of approval to a French vegan restaurant called ONA — for Origine Non Animale

“People used to be treated as the village idiot if they were vegetarian,” said Jean-Pierre Poulain, a sociologist specialising in food at the University of Toulouse. “That’s no longer the case.” 

The change was slow in coming, said Poulain, but as in other urbanised societies, French city dwellers anthropomorphised pets, idealised wild animals and no longer automatically accepted the legitimacy of killing animals to eat them.

As mayor of Lyon, Doucet has also found himself at the heart of another contemporary debate — this time a particularly French one — about the role of schools and other state institutions in shaping the values and ideals of the nation’s youngest citizens.

Macron and his ministers, who are currently promoting legislation designed to curb Islamist “separatist” ideology and lifestyles, are demanding strict adherence to French secular values. As such they are reluctant to see the state’s prerogatives usurped by local governments with their own priorities.

Conservatives have already fulminated about the Green mayor of Bordeaux rejecting a public Christmas fir because he did not want to celebrate around a “dead tree”. Other Green civic leaders have refused to host the Tour de France cycle race in their towns because of the carbon footprint of all the accompanying motor vehicles.

On the right, the loss of meat as a choice for school meals is sometimes portrayed as another step towards the forced dismantling of the French way of life, but politicians wary of pointless conflicts are more phlegmatic about the affair.

“I don’t think the children of Lyon are going to die of anaemia in the days ahead, but I also don’t think this will do much to reduce greenhouse gases,” Roland Lescure, an MP with Macron’s governing La République en Marche! party, was quoted as saying in Le Parisien.

“Everyone is playing politics,” he added, “including the mayor of Lyon.” 



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