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Greece forced to accept more austerity measures after €5.5bn black hole found in current plan
Greece was forced to agree to more austerity cuts at the EU summit yesterday, after the EU/IMF/ECB found a €5.5bn black hole in the current austerity package, further increasing the tension surrounding Tuesday’s vital vote on the plan in the Greek parliament. The Greek opposition continues to publicly oppose the current austerity plan, even though the EU summit conclusions stipulated that “given the length, magnitude and nature of the required reforms in Greece, national unity is a prerequisite for success”. FT Deutschland and Focus quote Eurogroup Chairman Jean-Claude Juncker saying, “I assume that the [Greek] government will get the majority in parliament. If not, the entire situation changes completely. No one in Greece should hope that there is such thing as a ‘plan B’.”

The summit conclusions provide few details as to the exact size and structure of the plan but, as expected, it will include a combination of austerity, privatisation and some attempt at a bond rollover. Some reports suggest that the overall package will be in the area of €120bn, which would include contributions from the private sector.

Prime Minister David Cameron received assurances last night that the European Financial Stabilisation Mechanism, which the UK partly underwrites, will not be involved in a second Greek bailout. EU President Herman Van Rompuy confirmed that the fund was “not part of the package”.  Open Europe’s Mats Persson appeared on Radio 5 live’s Wake Up to Money this morning, while Open Europe’s Raoul Ruparel appeared on BBC News, discussing the crisis. The Economist’s Bagehot blog looks at the letter from 14 newly-elected Conservative MPs that appeared in yesterday’s FT, calling for Cameron to take a more proactive approach to the eurozone crisis, and notes that the letter quoted Open Europe’s research showing that the UK has an exposure to the eurozone of over €700bn.   
Open Europe research FT WSJ FT 2 European Voice FT 3 Express FT 4 EurActiv EurActiv 2 European Voice 2 Times Guardian Guardian 2 Times FT: Brussels blog Irish Times Evening Standard Evening Standard 2 Yle The Independent The Independent 2 IHT La Tribune Le Soir Belgique Le Point Le Nouvel Observateur Irish Independent Irish Independent 2 La Tribune 2 IHT 2 Mail Telegraph Telegraph 2 FTD Standard BBC EUobserver BBC 2 EUobserver 2 Le Figaro El País Les Echos BBC: Today BBC: Today 2hs.fi hbl.fi verkkouutiset.fi FTDFocusSeeking Alpha

Economist: Greek default wouldn’t be another Lehman;
Lord Leach of Fairford: “The sole reason Britain did not join the euro was that the Government could not have won the promised referendum”
In a letter to the Times, in response to former Chancellor Alistair Darling, Open Europe Chairman Lord Leach of Fairford argues that, “Mr Darling still defends the principle of the single currency. Yet he admits that a one-size-fits-all monetary policy is senseless without a unitary fiscal system. It follows that he believes that Britain should be a member of a United States of Europe. This is a perfectly tenable position to hold, but it should be made explicit, so that the electorate, which holds a different opinion, can know where he stands.” “The sole reason Britain did not join [the euro] was that the Government could not have won the promised referendum,” he adds.

On Conservative Home, Open Europe’s Mats Persson argues that “Cameron is correct that the UK has a huge stake in all of this. But as 14 MPs from the new intake rightly argued in a letter to yesterday’s FT, more bail-outs will leave the UK equally exposed to future meltdowns in the eurozone – possibly on an even larger scale. Instead the UK should be pushing EU leaders to plan for an orderly restructuring of Greece’s debt (combined with a limited cash injection) which will actually deal with Greece’s debt burden.”

An article in the Economist argues that comparisons between Lehman Brothers’ collapse and a Greek default “are not exact” as Greece “has far fewer creditors: two-thirds of its debt is probably held by about 30 institutions. And whereas Lehman’s exposures were hidden from public view, Greece’s are largely out in the open and are also reasonably easy to value. The more light has been shone into the dark vaults of banks holding Greek government debt over the past year, the more markets have been reassured that few, if any, foreign banks are dangerously exposed.” The paper calls for an “orderly restructuring” for Greece within the eurozone and greater political union.

In the Guardian, Martin Kettle quotes Sir Stephen Wall, Tony Blair’s EU advisor, saying, “We have seen the high point of the European Union. With a bit of luck it will last our lifetime [Wall is 64]. But it's on the way out. After all, very few institutions last forever.”
Times letters: Leach FT: Stephens FT: Brittan Economist Economist 2 Economist 3 Economist 4 Economist 5 WSJ: Fidler WSJ: Andreasen Economist: Charlemagne Economist: Charlemagne Blog Guardian: Kettle Irish Times: Beesley Independent: McRaeEvening Standard: Blackhurst BBC: Mason Le Monde: Vesperini Conservative Home: Persson

The FT reports that European banks will have to rerun their data for the next round of EU-wide stress tests after the European Banking Authority required them to take greater account of potential additional losses on sovereign bonds.
FT WSJ

El País reports that the European Parliament has delayed the final vote on the package of six proposals to strengthen economic governance in the EU and the eurozone to July. MEPs are pushing for more automatic warnings from the Commission to EU member states which fail to comply with recommendations on the corrective measures to reduce their deficit and debt levels. If an agreement is not reached before the next European Parliament’s plenary session in early July, the package will need a second reading.   
Open Europe blog El País Les Echos El Mundo

Reuters reports that ECB lending to Greek banks jumped to €97.5bn at the end of May from €86.8bn in April, an increase of 12.3%.
Reuters Zero Hedge Reuters 2

Philippe Marini, an influential Senator from Nicolas Sarkozy’s UMP party has said that France’s increased guarantees to the eurozone’s temporary bail-out fund, the European Financial Stability Facility (EFSF), “will worsen our finances.” He argued that this “European solidarity is not a moral solidarity…Its existence will slow down and complicate the debt path that we have agreed upon.”
Le Monde

MEPs have demanded action from European Commission President José Manuel Barroso after EU Budget Commissioner Janusz Lewandowski questioned the impact of coal on climate change, reports EUobserver.
EUobserver

La Repubblica reports that Italy’s ECB Executive Board Member Lorenzo Bini-Smaghi has spoken by phone to French President Nicolas Sarkozy this morning, pledging to step down by the end of the year. Bini-Smaghi’s early resignation has cleared way for Italian Central Bank Governor Mario Draghi’s appointment as ECB President.
Repubblica

The EU Council of Ministers announced yesterday that it was considering joining the joint lobby register already in place for the European Commission and Parliament, EurActiv reports.
EurActiv

The Irish Independent reports that, even after the European Parliament bowed to pressure to publish the Galvin report on MEPs’ expenses abuses, two Irish MEPs, Gay Mitchell and Mairead McGuinness, who are both running in Ireland’s Presidential race, haven’t yet disclosed details of their expenses.
Irish Independent

EurActiv reports that, on top of the lawsuits already lodged at the ECJ, Italy and Spain have threatened to carry out more legal action if the EU Council and the European Parliament go ahead with the ‘enhanced cooperation' procedure to speed up the introduction of a single EU patent.
EurActiv

FT Deutschland quotes the head of the EU’s financial markets watchdog ESMA, Steven Maijoor, saying, “We should not blindly accept the regulatory system of third countries…the US [credit rating] agencies relied on their position as market leaders and thought that they would get their license in Europe instantly.”
Open Europe research FTD

The Telegraph reports that a ‘love hotel’ in Brussels claims that “Eurocrats are 80% of our business” and “unlike the traditional hotel industry, we have not experienced the economic crisis thanks largely to the Europeans in Brussels.”
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