This EPC Weekly Update focused mainly on two issues: firstly, the potential economic, legal and political implications of the German Constitutional Court’s ruling on the European Central Bank’s (ECB) Public Sector Purchase Programme; and, secondly, the state of the Brexit negotiations, including the impact of Covid-19 on the Brexit timetable.

EPC Director of Studies Janis Emmanouilidis described the ruling of the German Federal Constitutional Court (Bundesverfassungsgericht) as “unwise”. The judgment had raised doubts about the ECB’s role at a crucial moment, called into question the EU’s legal order and undermined the supremacy of the European Court of Justice (ECJ). The ECB had been wise not to over-react and to simply restate that it worked within its mandate. Fabian Zuleeg, EPC Chief Executive, pointed out that the ECB had been constituted on the basis of the German Bundesbank model. The Court’s ruling reflected a form of German exceptionalism in German legal circles and the argument needed to be dealt with robustly, most logically at the level of the Bundesbank. It was essential that the EU functioned on the basis of a clearly defined common legal framework. Both analysts agreed that the impact of the judgment would not be felt in the short-term but there could be serious long-term implications, by creating uncertainty, casting doubt on what the ECB can do in the future and opening the door for other Member States to question the authority of the ECJ.

Speaking about the Brexit negotiations, Jannike Wachowiak, EPC Junior Policy Analyst, commented on the UK’s intention not to seek an extension. The idea being attributed to the UK that a EU weakened by COVID-19 would make concessions was a miscalculation about the strength of EU unity and its determination to protect the Single Market. 

History would judge the UK badly, said Fabian Zuleeg, describing the decision not to ask for an extension as “reckless”, given the lack of concrete progress in the negotiations on contentious issues and the negative impact of Brexit aggravated by COVID-19. In his view the likelihood of a no-deal had increased. The row over an EU office in Northern Ireland was a proxy war for the conflict between the two sides which had very different approaches. Whereas the EU was seeking a comprehensive agreement and reassurance, the UK wanted as much autonomy and the least intrusion as possible. There was a growing mistrust between the two sides and the EU Negotiator Michel Barnier had expressed the Commission’s growing frustration with the UK and the lack of progress in the negotiations, accusing the UK of running down the clock. Could Prime Minister Boris Johnson make a U-turn and ask for an extension? It would not be the first time, but opinions were divided and the UK had to be a willing partner. This was an “ideological battle”, said Janis Emmanouilidis.