Britannia Radio

Open Europe

Europe

Portuguese and Spanish bond yields rise ahead of crucial debt sales;

France proposes ‘eurozone treasury’

The Guardian notes that yields on Portuguese and Spanish government bonds rose yesterday, following EU proposals to force bondholders to shoulder losses in future bank bail-outs. This comes ahead of crucial bond auctions next week. Deutsche Bank warns that survival of the single currency in its present form “can no longer be taken for granted”, reports the Times. A Reuters poll reveals that 44 out of 51 economists think Portugal will need a bail-out similar to Greece and Ireland and the FT quotes Jens Larsen, at RBC Capital Markets, saying, “If conditions deteriorate, then Spain is also at risk.”

Speaking on BBC Newsnight, French Finance Minister Christine Lagarde said that “all 17 members of the euro will be part of the Eurogroup” in 2011, adding that “there will be no restructuring of debt before the end of the year.” Lagarde said that the aim of the French and German governments is to see more harmonisation of economic policies but, when asked whether people had ever voted for this convergence she replied, “The European project has been around for over fifty years and it was built on the back of a situation where people were at war…The European project is something we all believe in because we want peace to be maintained.”

El Pais reports that a French government document proposes the creation of an ‘EU treasury’. It would initially comprise France and Germany and other eurozone states with sound public finances and is described as “the logical continuation of the creation of the Single Currency”. Les Echos reports that French Prime Minister François Fillon has said that “a monetary zone needs close budgetary surveillance, but also – and this is indeed what has been missing since the beginning [in the eurozone] – a minimum of convergence in the fiscal domain, and even in the social domain. This will be the big question over the next months and years.”

BBC Newsnight Economics Editor Paul Mason said that the “problem” with comments from Lagarde and other EU leaders is, “the longer one goes on with press conferences and interviews where politicians simply say ‘nothing is wrong’, they’re not really communicating with the people of Europe.” He suggested that Europe “is facing more than just a sovereign debt crisis, it begins to feel more like an existential crisis.”

The Irish Times notes that German Foreign Minister Guido Westerwelle has made it clear that future German aid will be conditional, quoting him saying, “Everyone who wants solidarity, and who has earned it, will get it, but solidarity is not a one-way street.”

The Irish Independent reports that Asian buyers accounted for 21.5% of the €5bn of five-year EU bail-out bonds issued this week, the European Commission said.

WSJ Irish Independent Le Monde Times Guardian Newsnight John Redwood's diary WSJ: Fidler WSJ: Koenigsberger WSJ 2 El Pais 2 Reuters El Economista AFP FT FT 2 FT 3 El Pais Irish Times Irish Times 2 IHT Reuters 2 Les Echos Les Echos 2

Commission unveils plans to force haircuts on bank bondholders;

New EU “Resolution Authority” proposed for 2014

The Commission yesterday released a consultation paper proposing new powers for national regulators to take over failing EU banks, sack board members, and impose haircuts on senior bank debt, the Telegraph reports. The Commission has put forward legislative proposals for a harmonised EU insolvency structure, which could be in place by 2012. The final phase would be the creation of a European Resolution Authority by 2014, adding a fourth institution to the EU’s new architecture of financial supervision and regulation. The Commission emphasised that the measures would only affect future debt. The plans allow oversight bodies to place a “permanent presence” of inspectors in the offices of suspect banks.

Open Europe research Telegraph Conservative Home: Lilico Euractiv EUobserver Irish Times Irish Independent FT WSJ EU Commission press release

Hungarian Prime Minister fights back on media law

At the inauguration ceremony of Hungary’s rotating EU presidency yesterday, Hungarian Prime Minister Viktor Orban launched an attack on France over its criticism of Hungary’s new media law. “Without precise knowledge and understanding of the text of the media law, not one single state, France included, has the right to criticise and ask Hungary to do anything. So I would like to ask the French government to return to the level of reality and rational discussion,” he told journalists. In an op-ed in the FT, Mr. Orban further argues: “We should only be obliged to change [our media law] if similar regulations in other EU member states have to be changed as well, otherwise it would be discriminatory and we would of course reject such pressure.”

Times FT FT: Orban El Pais IHT Economist: Charlemagne Economist: Charlemagne blog ABC El Mundo BBC Le Monde EUobserver Guardian

The Mail reports on EU Foreign Secretary Catherine Ashton’s poor attendance record at Commission meetings. Open Europe’s Mats Persson is quoted saying, “It was a spectacular mistake for the UK to go for the EU foreign minister post, which is a position of limited influence because there is no coherent EU foreign policy. The European Commission has huge powers to make laws that affect the UK but, instead of being present for these decisions, Ashton is off touring the world with very little to say.”

Mail Express

Van Rompuy aide: “Every crisis leads to more European integration”

In an interview with Belgian daily De Morgen, European Council President Herman Van Rompuy’s Chief of Cabinet Frans van Daele said, “Every crisis leads to more European integration...As a result of the Greek crisis we have managed to make budget discipline stricter, which had become too lax. From now on we will not only watch budget discipline, but also economic competitiveness...Macro-economic supervision now makes sure that we're following every member state on five indicators, and we even can call upon them and sanction them."

No link

The Times reports that City lawyers have warned against the Commission’s plans to introduce a single European contract law. Joanna Page, a partner at Allen & Overy, is quoted saying: “Europe does not need and cannot afford this initiative. Businesses are already struggling to cope and there’s a risk we’ll end up with an ill-conceived, badly drafted law that causes more problems than it solves”.

Times

Writing in the Telegraph, David Cameron’s former enterprise adviser Lord Young argues that the Government is not doing enough to reduce employment regulation. He cites EU proposals for regulation of part-time and flexible workers as a particularly poor example, arguing it will “end their employment.”

Telegraph: Young Open Europe research Open Europe press release

FTD reports that Bavarian CSU MEP Markus Ferber has called for EU salaries and perks to be reduced arguing, "These are really high compensations, which should be reformed".

No link

The Scotsman reports that, speaking at the Oxford Farming Conference, EU Agriculture Commissioner Dacian Ciolos said that direct payments to farmers have to be retained in the EU’s Common Agricultural Policy post-2013. “Direct payments can deliver more in terms of public goods than they do today. But their income supporting function is a must,” he argued.

Scotsman