Week in Review (2 August)

Brecon and Radnorshire by-election reduces Johnson’s majority to 1 MP

As anticipated, yesterday’s by-election in Brecon and Radnorshire was won by the Liberal Democrats by a narrower than expected margin of 1,425 votes. The victory was made possible by a “Remain Alliance” which saw Plaid Cyrmu, the Green Party and Reform stand aside in order to secure a pro-EU victory. It remains to be seen whether similar arrangements could be agreed for a general election. Unable to come to such an arrangement were the Conservative Party and the Brexit Party, the latter of whose 3,331 votes would have seen a unity Brexit candidate get over the line.

Polling analysis from polling aggregator Britain Election shows that Johnson’s best chance of a majority would be a general election shortly after a no deal Brexit. The rationale here is that Brexit voters would coalesce around the Conservative party while the remain vote would remain split, the experience in yesterday’s by-election notwithstanding.

German Constitutional Court closes one case against Eurozone integration, opens another

On Tuesday Germany’s Constitutional Court rejected a challenge to the eurozone banking union by finding that the European Central Bank’s supervisory role is compatible with EU law. However, the Court’s ruling may serve as a restriction on further integration by stating that the decisive factor is that the supervision of banks was not fully transferred to the ECB, as “national authorities still retain extensive powers”.

This was the latest ruling in a series of challenges brought by German academics to measures adopted by the ECB. With each ruling, the German Constitutional Court has imposed restrictions on integration by highlighting the supremacy of German constitutional law in many areas. On Tuesday the Court also heard a fresh set of challenges to the ECB’s right to buy government bonds. These continuous challenges to Eurozone integration mechanisms will have implications for policymaking in the Eurozone.

Carige rescue finalised but Malacalza family could still derail

As noted in previous reports, the European Central Bank has accepted a €900 million rescue plan for Carige – the details of which were finalised on Tuesday. However, one key obstacle that remains is the willingness of the Malacalza family, which has a 28% shareholding in Carige to accept the plan. They will vote on the plan at the end of September. While their approval is expected, it is worth noting that the family effectively vetoed a December restructuring plan which consisted of a €400 million rights issue.