Week in Review (1 March)

Italy returns to budgetary spotlight despite Fitch reprieve

On 22 February Fitch opted to maintain its BBB rating of Italy, with a negative outlook. In its commentary accompanying the review, Fitch cited political risks – particularly the possibility of an early general election – as well as the slowing of the Italian economy and the large debt load of the country. The latter were also highlighted by the European Commission, in its European Semester Winter Package – published on 27 February.

The Commission warnings could serve as a prelude to a formal request for the Italian government to alter their budget. This request would likely come in May, ahead of the European Elections. The election itself, could though, be a prelude to further political disruption in Italy, as strains continue to develop in the populist coalition. After the election, and particularly if the results for M5S disappoint, questions over the future of the government will pile up.

Bundestag legal opinion adds kink to Article 50 extension process

The timing of the European Elections, to be held in late May, has frequently been cited as a potential complicating factor in any Article 50 extension. The British government is of the view that an extension could certainly not run beyond the first week of July, when the new European Parliament is due to be sworn in.

The British position has now though been backed up by a Bundestag legal opinion, which has come to the conclusion that an Article 50 extension cannot go beyond the 23 May European Election date.

Neither the UK or the EU are likely to want to have to deal with legal uncertainty. This makes it likely that any extension will be short, and contingent on it being a one off. The corollary of this is that it plays into Theresa May’s clock management strategy.

Vestager suggests Google ‘Jobs’ service could be investigated

In our 17 January report, we noted that the long running series of disputes between Google and DG Comp showed how ‘once embroiled with DG Comp – it is difficult for tech companies, used to having things their own way, to extricate themselves.’

This was demonstrated again in the last week when Margrethe Vestager commented on the long running investigation into Google Shopping, stating that the European Commission still has concerns about services such as Google Jobs and Google Locals. These could serve as the basis for further detailed investigations.