Saturday 3 December 2016

Comment: Moscovici won't feed the Brexit elephant in the room in Brussels

Published 05/02/2016 | 02:30

European Economic and Financial Affairs Commissioner Pierre Moscovici. Photo: Reuters
European Economic and Financial Affairs Commissioner Pierre Moscovici. Photo: Reuters

Pierre Moscovici just won't go there. The Frenchman is evidently hoping that if he doesn't talk about the prospect that the British might vote this year to pull out of the EU and leaves it out of his set of risks facing the European economy, it might never happen.

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His mantra: whatever you say, say nothing, to paraphrase the late Seamus Heaney.

It's not like Moscovici and his team of forecasters in Brussels aren't alert to the potential risks facing the European economy over the next 12 months.

They cite a slowing China, a further hike in US interest rates, another slump in commodity prices, the slowdown in emerging economies, oil prices, a relapse into crisis for Greece and the migration crisis facing the continent as potentially posing problems.

The prospect of a so-called Brexit, it appears, doesn't make the grade.

"It's not in this forecast because it's not in our minds," Moscovici told reporters in Brussels yesterday.

Well, it's in the minds of plenty of others, and it's routinely cited as one of the biggest external threats facing Ireland this year given the close economic ties between the two economies, with trade potentially hugely affected.

Goldman Sachs yesterday warned that the value of sterling could plunge by up to a fifth if the British vote to leave, which would be hugely worrying for Irish exporters.

Goldman, still feels, however, that Britain will remain in the European Union and that the underlying dynamics of the UK economy will therefore remain "solid".

Maybe Moscovici thinks so as well, which is why he was having none of it.

"We are not talking about Brexit because we are all fighting to avoid that risk," he said.

Or perhaps he just doesn't want to dwell on any more negatives, even if it is potentially one of the biggest.

The Commission fractionally trimmed its growth forecast for the Eurozone and warned inflation would be much slower than expected, as the slowdown in emerging economies poses a major threat to recovery.

And it warned that France, Italy, Spain and Portugal are in breach of, or will break, EU deficit reduction rules unless they change policies.

Countenancing a British withdrawal, perhaps, on top of all that, may be simply too much to handle.

Irish Independent

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