Friday, February 16
MUNICH SECURITY CONFERENCE
European defence officials push for closer integration
Today, defence and security heavyweights will descend on Bavaria for the Munich Security Conference. Germany’s most significant foreign policy gathering brings together heads of state, business leaders and foreign ministers.
Driven by France and Germany, a push is on for a more integrated approach to EU defence. At the core of efforts is the Permanent Structured Cooperation on Security and Defence. The uniquely European pact aims to pool military resources and open the way for collective action in Europe’s immediate neighbourhood, independent of NATO.
Concerns over Russia’s involvement in the Ukraine conflict have made implementing the pact a priority. A key feature of the agreement is the removal of legal hurdles allowing for the rapid mobilisation of military equipment between nations.
Expect speakers to push for the implementation of a joint European defence fund. While a start-up budget of $621 million has been proposed, it remains to be seen how many countries will be included in the pact and how to fund the proposal.
UK ECONOMY
The UK releases retail data for January
Three days after it unexpectedly announced that inflation held steady at 3% in January, Britain’s Office for National Statistics will release last month’s retail sales data today.
Following December’s surprising 1.5% fall, today’s release is expected to indicate 0.6% growth in retail sales for January, although UK retail data is volatile and difficult to predict—December’s decrease was 0.9% worse than anticipated.
With the Bank of England last week revealing its intention to get inflation to 2% by 2020, today’s retail data and Tuesday’s inflation readings should be indicators of the UK’s monetary policy for 2018. Indeed, interest rates are likely to rise from 0.5 to 1% by the end of the year, with hikes forecast for May and November, although if inflation remains stubborn, the Bank of England may be forced into a third increase.
Still, sound monetary policy may not be enough in the London’s battle to hit its 2% target; inflation originally experienced a steep increase due to Brexit. As such, a messy exit from the bloc could see Britain’s inflation spiral out of control, likely sparking further discontent over Brexit.
POLISH-GERMAN RELATIONS
Morawiecki and Merkel meet amid fallout from controversial Polish Holocaust law
Today, Polish PM Mateusz Morawiecki will meet with Germany’s Angela Merkel.
The summit comes amid heightened tensions over a controversial Polish law that makes it a criminal offence to tie Poland to Nazi Germany’s wartime crimes. The law has drawn considerable condemnation by Jews and human rights activists, who claim it allows the government to undermine the role some Poles played in killing Jews during World War II.
Two weeks ago, Mr Morawiecki addressed his country in a prime-time address to quell tensions. Ms Merkel says Germany won’t interfere with Poland’s legislative process while maintaining her government harshly condemns anti-Semitism in all forms.
The traumatising historic relationship between Poland and Germany has certainly left an irreversible mark on both countries. However, domestic forces in both states, especially in Poland, have used the relationship to reopen old wounds for political benefit. Under the government of Poland’s right-wing populist Law and Justice party (PiS) revivals of anti-German sentiments have been used to help consolidate the ruling party’s base. Expect the Polish government to keep the controversial law on the books, largely ignoring concerns of its alleged anti-Semitic implications for immediate domestic political gain.