Category Archives: Finance

Deutsche Bank: “There’s No Escaping The Fact That This Is A Class War”

From DB’s Jim Reid, who succintly explains the “benefits” of 7 years of ZIRP, NIPR, Twist and QE… and leaves off with hopes for helicopter money.

The shockwaves and consequences around Brexit will resonate for years. It’s probably an understatement to say that most in financial markets regret the UK’s decision to leave but we should respect the forces that have been pushing us towards what has always been an inevitable political accident sometime soon. I wasn’t sure whether the Brexit vote was the one but I was pretty convinced one was coming and this is probably not the last. Spain yesterday started a general election cycle (more below but relatively market friendly) of the largest 5 euro-area economies (Spain, Holland, France, Germany and Italy) over the next 18 months or so, not forgetting the US this November. Throw in the crucial senate reform vote in Italy in October and you’ve got plenty of opportunity for rebellion against the establishment that haven’t managed to produce satisfactory enough growth for the lower paid/lower skilled to offset the forces of globalisation and immigration.

It’s worth looking at the voting split in the UK’s EU referendum based on polls compiled by Lord Ashcroft to get an idea of the disenfranchisement. In terms of socio-economic groups, 57% of ABs (upper/middle class – professional/managers etc) voted remain, 49% of C1s (lower middle class – supervisory/clerical or junior management/administrative), 36% of C2s (skilled working class) and 36% of DEs (Ds – semi & unskilled manual workers. Es – casual/lowest grade worker or state pensioner). So there’s no escaping the fact that this is a class war. Whether its globalisation, immigration, inequality, poor economic growth or a combination of all of them it’s quite clear from this and other anti-establishment movements that the status quo can’t last in a democracy. Eventually you’ll have a reaction. This is one such major reaction and given that the UK growth rate has been ok of late, it would be strange if pressure didn’t continue to build elsewhere where growth has been lower for longer.

Another point to make is that Europe’s natural state is change through history. A few months ago I saw a great 3 minute video from the World Economic Forum showing Europe’s ever changing borders since the year 1000.

It is amazing to see the constant shifting in boundaries, states and countries. By imposing an artificial EU boundary on a continent that’s natural state is change you are likely to build up tensions in a similar manner to tectonic plates so when it shifts it’s likely to shift big. Interestingly the video shows that in a continent of ever changing boundaries, one of the most stable alliances has been the one between England and Scotland. This is obviously at risk again. Please look at the video, even if some of the dates can be questioned, it’s an impressive eye opener to the continent’s evolution.

If one wants to look for positives it’s that there has to be a change of economic policy soon across the globe. We’ve discussed many times that the global financial system and many of the economies within it are broken. Well such a shock could eventually speed up better policies to address this. As we’ve said many times before we’d love that policy to be more creative destruction with debt being destroyed but realistically the mess is too big to fix this way without depressionary economic conditions. We therefore need a growth plan to grow into the burden and despite the obvious issues and moral questions, helicopter money is worth a risk. Anything that gets fiscal money into the economy (paid for by money printing) will surely be biased to those disenfranchised by current policies. QE directs money into establishment institutions and only eventually the masses via trickle down (if much occurs). We think Brexit will eventually speed up ‘helicopter money‘ and one never knows, maybe a new UK government may be forced to spend more and we’ll see the UK as an early adopter.


Deutsche Bank: “There’s No Escaping The Fact That This Is A Class War”

Brexit is good. No economy getting greater freedom has done worse.

Big Politics was subjected to the stress which much of Big Business has been absorbing for some years – and it has buckled. Britons voted 52% to 48% to leave the European Union, the biggest political shock in modern times. The money markets have reacted sharply to the news, sterling’s value falling more than 8% against the US Dollar and the FTSE 100 index on the London stock Exchange also more than 8% below where it ended yesterday. This superb pre-vote think piece by asset allocator Charles Gave shows that although markets are struggling to absorb the result, there are clear long-term benefits. Gave is a 40 year money managing veteran and the co-founder of a $10bn asset management business sold into Alliance Capital in 1995. He left the company four years later to return to his first love – researching tactical asset allocation for Gavekal which he chairs. – Alec Hogg 

By Charles Gave*

The UK political class is all in a flutter as the latest European Union referendum polls show an apparent rising tide of support for “Leave”. Having orchestrated the great and good into warning of catastrophe should a Brexit materialize, it would seem that “project fear” is not cutting through. I tend to have strong political convictions and perhaps for this reason I have a lousy record of guesstimating election outcomes. Since the UK referendum debate started, I always felt that the Brits would vote to leave, so no one would be more surprised if I was for once proven right.

A TV shows the resignation of Britain's Prime Minister David Cameron as traders from BGC, a global brokerage company in London's Canary Wharf financial centre react after European stock markets opened June 24, 2016 after Britain voted to leave the European Union in the EU BREXIT referendum. REUTERS/Russell Boyce
A TV shows the resignation of Britain’s Prime Minister David Cameron as traders from BGC, a global brokerage company in London’s Canary Wharf financial centre react after European stock markets opened June 24, 2016 after Britain voted to leave the European Union in the EU BREXIT referendum. REUTERS/Russell Boyce

The question for investors is how much a Brexit would matter. On the one hand bond yields are plumbing new lows, pointing to fears of a looming macro shock, yet the pound remains within its recent trading range. I must admit to having very little trepidation beyond the short term volatility that would ensue. My starting point is that I cannot remember a single incident of increased freedom being followed by a sustained decline in living standards—not one. And even ardent “remainers” would be hard pressed to argue that an exit from the regulatory and non-democratic EU monster would not boost economic freedom in the UK.

Of course the center piece of the scare campaign run by the men of Davos is that a Brexit would result in capital fleeing the UK, resulting in a collapse of the pound and general impoverishment for the population. So it is interesting to note that the pound is at about its purchasing power parity level versus Germany, which implies that it is undervalued by about 5% against France and by almost -10% versus Spain and Italy. On the same basis, sterling is undervalued by about -3% against the dollar. Hence, any decline in the pound from this level would make UK manufacturers and service providers highly competitive. Car factories in the Midlands would quickly start humming to the swift detriment of Wolfsburg and Munich.

Read also: Value investor Dan Brocklebank: Don’t panic. Here’s why UK much better off outside EU.

Running a London-based money management business operated through Dublin would become far more profitable, as would the insurance industry. Both of these sectors should do well from less intrusive British regulation compared to the European hammer (and sickle). Consequently, once the situation stabilized after an EU exit, capital would quite quickly start flowing back into the UK.

So my advice is simply to let the Financial Times-following crowd work themselves up into a frenzy of pound-selling and should the result be for an exit, fairly soon afterward move in to buy the currency. As for UK equities, most of the big index components are banks and commodity players, which will be affected in only a limited way by any change in Britain’s relationship with Europe. HSBC, for example, earns about two thirds of its profit from Asia, with almost 40% made in Hong Kong. The situation would be quite different for medium-sized UK companies which will see an immediate benefit from a cheaper pound so I would be a big buyer, just as I was in the aftermath of the UK’s exit from Europe’s Exchange Rate Mechanism in 1992.

As for the bond market, I am admittedly not thrilled by the current low level of yields, but if the pound becomes cheap enough, investors should certainly sell bonds in the likes of Italy, Spain and France, and buy gilts.

All in all, I believe that a vote for Brexit would be a great day for liberty and for free markets, a bit like that achieved by Margaret Thatcher in the 1980s. I have no doubt that the 364 economists who signed the letter to The Times in 1981 condemning her macroeconomic policies would have sided with “Remain”. Two years after that letter was sent, the markets bottomed in April 1983 and UK equities entered a structural boom.

To summarize, if Brexit materializes, there will be dislocation, but it will offer an immense opportunity for those willing to take risks and extend the duration of their views. The end of horror is always better than a horror without end, runs the German saying, and it must be said that they are specialists in this topic.

By contrast, if Remain wins, the British caravan will maintain its slow crawl into Europe’s death valley and the participants would do well to remember Dante’s invocation on the gates of the inferno “Abandon all hope, ye who enter here” .

  • Charles Gave is the founding partner and chairman of Gevekal and President of the Institut des Libertés. Read more of his work by clicking here.


Brexit is good. No economy getting greater freedom has done worse. –

You Cannot Trust Cameron – Vote Leave


David Cameron repeatedly refused to answer basic questions on Turkey

David Cameron repeatedly refused to answer basic questions on Turkey

June 19, 2016 8:41 PM

Responding to David Cameron’s appearance on Question Time, Vote Leave Chief Executive Matthew Elliott said:

‘David Cameron repeatedly refused to say that he would veto Turkey joining the EU. That’s because – in his own words – he is the “strongest possible advocate” of Turkey joining. He has said before that he is “angry” that it is taking too long for Turkey to join. The EU has recently accelerated talks with Turkey with David Cameron’s support and UK taxpayers are sending £1 billion to Turkey to help them join. You cannot trust Cameron on Turkey.

‘Cameron had no answers to people’s legitimate concerns on immigration tonight and failed to set out how he would meet his manifesto pledge to bring the numbers back down to the tens of thousands while remaining in the EU. He had no answer on how we would fund the NHS to cope with higher levels of immigration.

‘He has avoided speaking to the British public throughout the campaign because he knows that they do not believe him anymore on the EU. It showed tonight as he was openly mocked by the audience. If you don’t believe Cameron’s spin and want to take back control you need to Vote Leave on Thursday.’

A note regarding factual errors repeated by the Prime Minister and Chancellor

We want to highlight ten objectively false statements made by the Prime Minister and Chancellor recently, including by the Chancellor this morning on the Peston show. We expect some of these statements to be repeated by the Prime Minister this evening. These cover bailouts, asylum, free movement, national security issues such as deportation, the powers of the European Court of Justice, and the legal status of the Prime Minister’s deal. The BBC should not allow the Prime Minister and Chancellor to continue to make these statements to millions of voters unchallenged.

Journalists should make clear the legal facts, in particular those concerning the EU’s ‘free movement’ laws and the Prime Minister’s repeated promises on immigration concerning ‘tens of thousands’ which – leaving aside the wisdom of it as a policy – is not achievable while we remain in the EU.


We want to highlight ten objectively false statements made by the Prime Minister and Chancellor recently, including by the Chancellor this morning on the Peston show. We expect some of these statements to be repeated by the Prime Minister this evening. These cover bailouts, asylum, free movement, national security issues such as deportation, the powers of the ECJ, and the legal status of the Prime Minister’s deal. The BBC should not allow the Prime Minister and Chancellor to continue to make these statements to millions of voters unchallenged.

Journalists should make clear the legal facts, in particular those concerning the EU’s ‘free movement’ laws and the Prime Minister’s repeated promises on immigration concerning ‘tens of thousands’ which leaving aside the wisdom of it as a policy is not achievable while we remain in the EU.

1 The supposed requirement for EU migrants to have a job offer

The Chancellor of the Exchequer has claimed that EU migrants must have a job offer to come to the UK. Asked by Andrew Neil whether David Cameron’s ‘fallback then was to say that EU citizens couldn’t just come here looking for work, they had to have a job, that’s what he promised, and he bottled that too, because that’s not the case?’, George Osborne said: ‘I’m afraid it is the case’. Asked to clarify this, the Chancellor reiterated that ‘if you don’t have a job, you have to go.’

This claim is false. As early as 1991, the European Court held that the ‘Treaty entails the right for nationals of Member States to move freely within the territory of the other Member States and to stay there for the purposes of seeking employment’. Even David 1 Cameron’s own renegotiation agreement notes that EU citizens are ‘entitled to reside… [in the UK] solely because of their jobsearch’.


2 The purported inability of all EU migrants to claim unemployment benefit

The Prime Minister has repeatedly asserted that EU migrants cannot claim unemployment benefit in the United Kingdom. On SkyNews on 2 June, he claimed ‘if you come to our country

1 R v Immigration Appeal Tribunal, Ex parte Antonissen [1991] ECR I745,

summary para [1], link .

2 European Council, 19 February 2016, link


first of all you don’t claim unemployment benefit’. On ITV, he claimed: ‘What 3 I have secured is this idea, this proposal that if people come here, first of all they can’t claim unemployment benefit’.

This claim is false. EU law gives EU nationals the same rights to jobseeker’s allowance as UK nationals following a period of employment of a year in the UK, and an equivalent right for six months if they have been employed in the UK for less than a year.4 It is certainly true that there is no requirement under EU law to pay noncontributory cash benefits designed to provide subsistence to persons who entered the UK seeking work and who have never found it. However, that was clear before the Prime Minister began his renegotiation.5

3 The length of time in which EU jobseekers can reside in the UK

The Prime Minister has claimed EU migrants must leave the United Kingdom after six months. On SkyNews, he claimed that ‘after six months if you haven’t got a job you have to leave’.6 On ITV, he alleged that ‘if they don’t have a job within six months, they have to go home’. George Osborne has told Andrew Neil that ‘if you don’t have a job after six months, you have to go.’

These claims are false. In 1991, the European Court of Justice ruled that article 45 of the Treaty on the Functioning of the European Union forbids the removal of jobseekers from another EU member state regardless of the duration of their stay if ‘the person concerned provides evidence that he is continuing to seek employment and that he has genuine chances of being engaged’.7 This applies regardless of the length of time that jobseekers have resided in the UK.

This ruling is incorporated in the Free Movement Directive. This provides that: ‘an expulsion measure may in no case be adopted against Union citizens or their family members if… the Union citizens entered the territory of the host Member State in order to seek employment. In this case, the Union citizens and their family members may not be expelled for as long as the Union citizens can provide evidence that they are continuing to seek employment and that they have a genuine chance of being engaged’.8 Contrary to the Prime Minister’s claims, therefore, EU law precludes national rules under which all jobseekers are removed after six months.

It should be noted that the Government admitted in December that many jobseekers could remain for longer than six months. The Home Office Minister, James Brokenshire, admitted in December that some EU migrants can ‘keep the status of jobseeker for longer than six months’. 9 It is also the case that there is no mechanism for monitoring whether or not jobseekers remain in the UK for over six months. EU law forbids systematic verification of whether EU citizens are lawfully resident in the UK, providing that: ‘this verification shall not be carried out systematically’.10

3 SkyNews , 2 June 2016, link .

4 Directive 2004/38/EC, art. 7(3), link ; Immigration (European Economic Area) Regulations 2006, SI 2006/1003, reg. 6, link .

5 Directive 2004/38/EC, art. 24(2), link ; Dano v Jobcenter Leipzig , Case C333/

13, link ; Jobcenter Berlin Neukölln v Nazifa

Alimanovic , Case C67/

14, link ;

6 SkyNews , 2 June 2016, link .

7 R v Immigration Appeal Tribunal, Ex parte Antonissen [1991] ECR I745,

operative para, link .

8 Directive 2004/38/EC, art. 14(4)(b), link .

9 ‘EU Nationals: Employment: Written question – 17574’, 2 December 2015, link .

10 Directive 2004/38/EC, art. 14(2), link .


4 The nature of proposed reforms to inwork benefits

The Prime Minister has stated that it is a certainty that proposed reforms to inwork benefits will take place and that these only apply to the United Kingdom. On ITV, he said: ‘Uniquely in Britain, you are going to have to work here for four years paying into the system, contributing to our economy for four years before you get full access to our welfare system’.

This contains several errors. Leaving aside the very real question of the compatibility of the ‘emergency brake’ with the Treaties, there is no certainty that it will come into force. Since the new proposed new Regulation is to be adopted by codecision, it could be vetoed by the European Parliament after the referendum. In addition, the European Council’s conclusions make clear that the Council of Ministers ‘could’ authorise the UK to restrict the payment of noncontributory benefits, not that it would do so. Contrary to the Prime Minister’s 11 claims, there is nothing in the renegotiation to suggest this applies ‘uniquely’ to Britain.

The Government has itself admitted that the ‘emergency brake’ may not come into force since it will be subject to ‘further renegotiation’. Just after the renegotiation agreement of 19 February, the Commercial Secretary to the Treasury, Lord O’Neill of Gatley, conceded that: ‘Details of the proposals for restricting inwork benefits for EU nationals will be subject to further negotiation and we cannot speculate on these’. The Minister was unable even to state which benefits the ‘emergency brake’ might apply to.12

5 The supposed ability of the United Kingdom to exclude EU citizens

The Prime Minister has made several false statements about the UK’s ability to exclude EU citizens from the UK. On SkyNews, he asserted ‘of course it isn’t freedom of movement if you are a criminal, it isn’t freedom of movement if you are a terrorist’.13 On ITV, he asserted ‘we can stop anyone at our border, EU nationals included, and if we think they are a risk to our country, we don’t have to let them in’. It is false to suggest that those involved in terrorism cannot exercise free movement rights in the UK. ZZ was an AlgerianFrench national who had resided in the UK between 1990 and 2005. In 2005, the Home Secretary, Charles Clarke, refused him readmission on return from a trip to Algeria and expelled him on the grounds of public security. Following a series of legal challenges, including a reference to the European Court of Justice, in 2015, the Special Immigration Appeals Commission ruled the Home Secretary, Theresa May, could not exclude ZZ from the UK because of EU law. The Commission noted that:

We are confident that the Appellant was actively involved in the GIA [Algerian Armed Islamic Group], and was so involved well into 1996. He had broad contacts with GIA extremists in Europe. His accounts as to his trips to Europe are untrue. We conclude that his trips to the Continent were as a GIA activis t’.14

11 European Council, 19 February 2016, link .

12 ‘Social Security Benefits: EU Nationals: Written question HL5972’,

8 February 2016, link .

13 SkyNews , 2 June 2016, link .

14 ZZ (France) v Secretary of State for the Home Department [2015] UKSIAC SC_63_2007, link .


It is also wrong to suggest there is no free movement for criminals. The Free Movement Directive (which in this respect is unchanged by the renegotiation) provides that persons can only be removed for reasons ‘based exclusively on the personal conduct of the individual concerned. Previous criminal convictions shall not in themselves constitute grounds for taking such measures.’ Recently, the UK was required to readmit a Romanian 15 rapist, Mircea Gheorghiu, whom the Home Secretary had expelled, and grant him permanent residence.16 It is notable that the Government has in the past conceded there is ‘free movement of criminals’.17 It is also false to suggest that the UK can turn away anyone who we think is a risk to the country. EU law requires that ‘the personal conduct of the individual concerned must represent

a genuine, present and sufficiently serious threat affecting one of the fundamental interests of society.’18 This is patently a much higher threshold than mere ‘risk’.

6 The effect of the renegotiation on the UK’s ability to exclude EU citizens

The Prime Minister claimed he had strengthened the ability of the UK to exclude EU citizens during his renegotiation. On ITV he stated: ‘in my renegotiation, I strengthened that [the ability to exclude EU citizens] to give us more freedom to do that… my renegotiation means we have more freedom to stop people coming in in the first place’.

This is false. As part of the renegotiation, there is no proposal to amend the Treaties or the 2004 Free Movement Directive in this respect. The proposals agreed at the European Council will be contained ‘in a Communication’ to be issued by the European Commission.19 As the Commission accepts, a ‘Communication is a policy document with no mandatory authority. The Commission takes the initiative of publishing a Communication when it wishes to set out its own thinking on a topical issue. A Communication has no legal effect.’20 The European Court has held that a declaration of member states which purports to limit rights under EU law has ‘no legal significance’ unless and until it is incorporated in EU law.21

The Commission’s declaration states that the UK ‘may take into account past conduct of an individual in the determination of whether a Union citizen’s conduct poses a “present” threat to public policy or security’.22 Yet the European Court has already ruled that a previous conviction can ‘be taken into account in so far as the circumstances which gave rise to that conviction are evidence of personal conduct constituting a present threat’.23 The Commission’s declaration also states that member states ‘may act on grounds of public policy or public security even in the absence of a previous criminal conviction on preventative grounds but specific to the individual concerned’.24 Yet the European Court ruled it was possible

15 Directive 2004/38/EC, art. 27(2), link .

16 Gheorghiu v Secretary of State for the Home Department [2016] UKUT 24, link .

17 Home Office, 8 November 2014, link .

18 Directive 2004/38/EC, art. 27(2), link .

19 European Council, 19 February 2016, link .

20 European Commission, 2006, link .

21 R v Immigration Appeal Tribunal, Ex parte Antonissen [1991] ECR I745,

para [18], link .

22 European Council, 19 February 2016, link .

23 R v Bouchereau [1977] ECR 1999, para [28], link .

24 European Council, 19 February 2016, link .


to remove persons in the absence of a criminal conviction in 1974 in the first case referred to

that court after the UK joined the EU.25

7 The UK’s supposed exemption from Eurozone bailouts

The Prime Minister has said that the UK can never be required to contribute to a Eurozone bailout. On SkyNews, he said ‘we can never be asked to bail out eurozone countries’.26

This is false. Article 122(2) of the Treaty on the Functioning of the EU (which was not, and could not be changed by David Cameron’s renegotiation) permits the Council of Ministers by qualified majority to ‘grant… Union financial assistance’ as part of ad hoc bailouts of the Eurozone.27 It was article 122 which was used as the legal basis for the creation of the European Financial Stabilisation Mechanism in 2010, which was subsequently used to bail out Ireland and Portugal. 28 There is nothing in EU law which would prevent its use to create another fund, financed out of the EU budget, to which the UK would be obliged to contribute.

The European Court has consistently ruled that the establishment of Eurozoneonly bailout mechanisms does not affect the Council of Ministers’ powers under article 122(2). In 2012, it ruled that:

‘The establishment of the ESM [European Stability Mechanism, a eurozoneonly fund] does not affect the power of the Union to grant, on the basis of art.122(2) TFEU, ad hoc financial assistance to a Member State when it is found that that Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control’.29

In September 2015, the General Court confirmed that article 122(2) ‘enables the Union to grant ad hoc financial assistance to a Member State’.30 Unless and until article 122(2) is amended, the UK remains liable to bail out the Eurozone.

8 The VAT lock and last year’s judgment of the European Court

The Prime Minister has claimed that the European Court has not overruled his ‘VAT lock’. When asked on SkyNews whether the European Court was ‘overruling the sense of one of your promises in a Queen’s Speech to decide what British VAT was’, the Prime Minister said: ‘I don’t accept that.’31

This claim is false. The Prime Minister made a clear commitment before the last election that there would be ‘no increases in VAT nor an extension of its scope’.32 Parliament legislated to give effect to this soon after the election. On 18 November 2015, the Finance (No.2) Act 2015 became law. Section 2 of the Act contains the ‘VAT lock’. It provides that no item subject to the

25 Van Duyn v Home Office [1974] ECR 1337, link .

26 SkyNews , 2 June 2016, link .

27 TFEU, art. 122(2), link .

28 Regulation 2010/407/EU, link .

29 Pringle v Government of Ireland , Case C370/

12, para [104], link .

30 Anagnostakis v Commission Case T450/

12, para [48], link .

31 SkyNews , 2 June 2016, link .

32 David Cameron, Twitter , 28 April 2015, link .


reduced rate of VAT on the date the Act became law may be made subject to the standard rate of VAT before the next general election.33 On 4 June 2015, the European Court upheld an action by the European Commission against the United Kingdom that the UK’s reduced rate of VAT on energy saving materials was contrary to EU law.34 HMRC has admitted that ‘the UK is required to implement judgments of the CJEU without any undue delay’ and is proposing an increase in VAT as a consequence.35 The UK is therefore obliged to raise VAT on the installation of some energy saving products in direct breach of the VAT lock set out in the Finance (No.2) Act 2015.

9 The supposed absolute requirement for a referendum before further transfers of powers to the EU

The Prime Minister has asserted it is impossible for further powers to be transferred to the EU without a referendum being held. On SkyNews, he alleged: ‘Any powers passed from Britain to Brussels have to be put to a referendum of the British people so Labour could not join or no other government could join the euro without asking the British people in a referendum… you can’t transfer further powers from Britain to Brussels without asking the British people first in a referendum’.36 On ITV, he alleged ‘if there is any proposal to pass further powers from our Parliament to Brussels, automatically there has to be a referendum. So there’s a lock on whether more powers can be passed.’

These claims are false. It is an established constitutional principle that no Parliament can bind its successor.37 As a result, the European Union Act 2011 (to which the Prime Minister must be referring) does not bind future Parliaments. It is therefore inaccurate and misleading to suggest there is any legal guarantee of a referendum in case of a future Treaty conferring new competences on the European Union.

Further, it is unarguable that the European Court of Justice can issue judgments that remove powers from the UK. It routinely does so. There is no appeal. There is no referendum. In many respects the remorseless weight of the European Court’s judgments over time is one of the most significant ways in which the EU undermines British democracy.

10 The supposedly ‘legally binding’ nature of the Prime Minister’s deal

The Prime Minister has claimed that the renegotiation agreement is ‘legally binding and irreversible’.38 The justification for this claim was set out by the Government in its White Paper on the renegotiation, which states: ‘As the European Court of Justice has confirmed in the case of Rottmann , it is required to take these provisions into account when interpreting the Treaties in the future, giving our decision force before the courts.’39

33 Finance (No.2) Act 2015, s. 2(3), link .

34 Commission v United Kingdom , Case C161/

14, link .

35 HMRC, 9 December 2016, link .

36 SkyNews , 2 June 2016, link .

37 See, for example, Madzimbamuto v LardnerBurke

[1969] 1 AC 645, 722723

(per Lord Reid).

38 Hansard , 22 February 2016, col. 34, link .

39 HM Government, February 2016, link .


This is extremely misleading. In order to assess the substance of the claim, it is necessary to consider the fate of the Danish renegotiation of 1992, which was cited in the case of Rottmann by the European Court.

In 1992, Denmark was promised via exactly the same type of deal that the UK is now being offered that EU citizenship would ‘not in any way take the place of national citizenship. The question whether an individual possesses the nationality of a Member State will be settled solely by reference to the national law of the Member State concerned’. The Prime 40 Minister, John Major, said the Danish deal was ‘a legally binding decision’.41 Less than a decade later, the European Court broke this agreement , declaring EU citizenship would ‘be the fundamental status of nationals of the Member States’.42

The European Court explicitly ignored the Danish renegotiation in the only case in which it has been cited, Rottmann . In that case, the European Court said that ‘Member States must, when exercising their powers in the sphere of nationality, have due regard to European Union law’, blocking member states from automatically stripping national citizenship from those who acquire it fraudulently, in direct breach of the Danish deal.43 The European Court took the Danish renegotiation into account (as the Government says), but nonetheless ignored it .

Our own Supreme Court has said the Danish renegotiation has been ignored by the European Court. Last year, Lord Mance JSC said, with the concurrence of a majority of the court, that the decision in R ottmann is ‘in the face of the clear language’ of promises made to Denmark.44 Several leading lawyers have also made clear that the deal will not bind the European Court. These include Lord Pannick QC, Marina Wheeler QC and John Howell QC.45

It is therefore false to claim that the Prime Minister’s deal will bind the European Court, just as Michael Gove pointed out in February. The ECJ itself will decide which parts of Cameron’s deal it will uphold, if any. There is no appeal from its decisions.


The Prime Minister and Chancellor have said repeatedly that the British public should not expect another vote on the EU for at least a generation. The voters are being

asked by them to vote to maintain the current supremacy of EU law with all that entails for the democratic legitimacy of policies as diverse as immigration, tax, and terrorism.

It is therefore vital that false statements made by the Prime Minister and Chancellor are challenged particularly by trusted public broadcasters and that their statements do not continue to mislead the public.

40 Edinburgh European Council, 12 December 1992, link .

41 John Major Doorstep Interview with Jacques Delors, 12 December 1992, link .

42 Grzelczyk v Centre public d’aide sociale d’OttigniesLouvainlaNeuve

[2001] ECR I6193,

para [31], link .

43 Rottmann v Freistaat Bayern [2010] ECR I1449,

link .

44 Pham v Home Secretary [2015] UKSC 19, para [90], link .

45 The Times , 25 February 2016, link ; The Times , 25 February 2016, link ; The Times , 26 February 2016, link .



You Cannot Trust Cameron – Vote Leave

« Older Entries Recent Entries »