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Eurozone source expects Portugal to seek a bail-out by April
Reuters reports that, according to a eurozone source, the EU has a bail-out plan in place for Portugal, with many officials expecting it to be needed before April. "Portugal is drowning. It's not going to be able to hold on beyond the end of March," the source said. "That's already understood to be the case in financial markets, but now it's also understood among [EU] finance ministers."
Meanwhile, Germany's Europe Minister Werner Hoyer told reporters yesterday that the permanent eurozone bail-out mechanism due to kick-off in 2013 “is not a regional development fund. That would be close to a liability union.” He also stated that debt restructuring is “of course an option” for some eurozone economies.
EUobserver reports that European Council President Herman Van Rompuy has begun a tour of eastern states to soothe nerves over Franco-German proposals for an economic government of the eurozone.
The FT reports that the mood over Spain’s economy and debt problems has become increasingly positive over the last few weeks. This has been demonstrated by lower bond yields and increased stability in the cost of borrowing, culminating in a successful bond auction at ‘favourable rates’ yesterday. However, Handelsblatt suggests that investors reacted with disappointment since demand was lower than usual. So far Spain has issued €16bn worth of bonds, equivalent to 17% of its €94bn funding requirements this year.
Writing in the FT Deutschland, German liberal MP Frank Schäffler warns: "The Chancellor [Angela Merkel] wants to legitimise European centralisation with her pact for competitiveness.” He adds that “the truth is that a restructuring of Greece is unavoidable", noting that "countries with excessive debt can only become competitive again through voluntarily leaving the eurozone.”
In the Times, Roger Boyes argues that “Italy is beginning to look like one of the most vulnerable economies in the eurozone. It has an outstanding public debt of €1.7 trillion, about 115% of GDP…Italy has dropped from 39th to 49th place in a scale of global competitiveness. It is in the lower half of innovatory EU countries.”
The WSJ reports that the European Economic Advisory Group, supported by German think-tank IFO Institute, argues that there is a chance of the eurozone becoming a transfer union, with countries such as Greece “becoming addicted to transfers”, but that such a system would never be sustainable or beneficial.
A briefing by the Economist on the state of central banks reports on a survey by Eurobarometer which shows that the percentage of people that ‘trust’ the ECB has fallen to around 40%.
WSJ Reuters Les Echos Independent BBC EUobserver FT Times: Boyes WSJ 2 FT: Barber Economist Economist Briefing Handelsblatt
National Secular Society claims Government’s school academy scheme breaches EU law
The Independent reports that the National Secular Society has obtained legal advice that says the Government’s academy school programme may breach EU law on discrimination. Non-religious staff in state schools have statutory protections against discrimination on the grounds of their religion, or lack of it, the society said, including the right not to have to take religious education lessons or conduct religious assemblies. It claims that this protection is lost if a school becomes an academy.
Independent PA
The Times reports that the Government’s own secret legal advice shows that Britain would face no serious sanction if it ignores the Strasbourg European Court of Human Rights’ rulings. “The direct sanctions for failure to comply with Strasbourg judgment are political rather than judicial,” the leaked document says.
Open Europe research Times Mail Mail 2 Conservative Home: Tannock
De Volkskrant reports that the Dutch Parliament has adopted a motion urging the Dutch coalition government to “forcefully distance itself” from any move towards political union in the EU. The article notes that the room for manoeuvre of Dutch Finance Minister Jan Kees de Jager, who opposed the motion, will now become narrower.
Volkskrant
In an interview with Le Figaro, French Defence Minister Alain Juppé argues: “We live in an unpredictable world and it would be irresponsible of the EU not to mutualise its forces. We need to encourage, push this process which does not move ahead spontaneously, [we need] to involve the UK, Germany, Spain, Italy, Poland.”
Le Figaro: Juppé
The FT reports that the European Commission has requested that the UK change its system to curb offshore tax avoidance, arguing that rules that stop investors moving their wealth abroad amount to a violation of fundamental principles of the single market.
FT
Jeremy Warner: Cameron provides Merkel with a “useful counterweight to her more federalist European partners”
In the Telegraph, Jeremy Warner notes that “for [German Chancellor] Angela Merkel eurosceptic Britain provides a useful counterweight to her more federalist European partners. The UK's position also chimes with the widespread view in Germany that Europe's future lies not in further internal integration but in global engagement.” He goes on to argue: “What's happening is that bilateral relations in Europe are once more becoming as important as multilateral ones, and this is very much to the UK's advantage.” He does however warn that the UK is likely to come under pressure to contribute to future bail-outs of eurozone countries where British banks have a high exposure, should they be threatened.
Telegraph: Warner
US pushing EU to adopt controversial anti-counterfeiting treaty
The US government has pressed the European Parliament to pass a controversial anti-counterfeiting treaty (ACTA) later this year, after an agreement was finally sealed after four years of secretive negotiations between the US, the EU and other states. The legislation is controversial because it allows governments to order online service providers to disclose information about subscribers whose accounts have allegedly been used for trademark or copyright infringements.
EUobserver
The Economist has backed Italian Mario Draghi for the job of next European Central Bank President, arguing that “no other candidate’s CV can match his.” Handelsblatt notes that Dutchman Nout Wellink is the only other candidate in the running and FT Deutschland quotes a source in Berlin saying that an Italian would not be acceptable to the German public.
Economist Handelsblatt Spiegel
The massive €16bn spike seen in the use of the ECB’s overnight marginal lending facility for the past two nights is being put down to a ‘fat finger’ or typing error. If this is the case, the rollover is likely to continue until the next round of the ECB’s main refinancing operations on 23 February.
FT Irish Times FT Money Supply Blog FT Alphaville
The BBC reports that yesterday the European Parliament gave its final approval to a free trade agreement between the EU and South Korea. The deal was adopted under the new Lisbon Treaty rules, which give MEPs the power to reject international trade agreements for the first time.
EUobserver BBC
EUobserver reports that Humanitarian Aid Commissioner Kristalina Georgieva has said she is opposed to transferring the management of the EU’s development aid budget to the European External Action Service, the EU’s new diplomatic corps. “Over my dead body. It would be a very grave mistake for Europe to do,” she argued.
EUobserver
The Guardian quotes two Conservative MEPs saying that the Polish Law and Justice Party’s choice of nomination for leader of the European Conservatives and Reformists group in the European Parliament could put the Polish party on a collision course with David Cameron.
Guardian
Webwereld.nl reports that Dutch Interior Minister Piet Hein Donner has given an overview of how EU member states are collecting fingerprints, required by the EU for passports, showing that 10 out of 27 member states store fingerprints in centralised national databases. The regulation is not applicable to the UK.
Dutch government document Press Release Webwereld.nl
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