| Open Europe |
Europe
Government suffers another defeat on EU Bill as Lords vote to restrict ‘referendum lock’
PA reports that the Government yesterday suffered another narrow defeat on its European Union Bill, as the House of Lords adopted by 213 to 209 a set of amendments which would significantly restrict the number of areas subject to the proposed ‘referendum lock’ on future transfers of powers to Brussels. The amendments – which were put forward by former UK permanent representative to the EU Lord Hannay of Chiswick – would only require a referendum to be called on the UK joining the euro, the creation of a “single, integrated [EU] military force”, and changes to border control. The Government is likely to seek to reverse the defeat when the Bill returns to the Commons.
Open Europe research
S&P downgrades Greece again making it the world’s lowest rated economy;
Eurozone finance ministers meet to solve dispute between ECB and Germany
Standard & Poor’s has today downgraded Greece’s debt by three notches, to CCC, giving it the lowest credit rating in the world and leaving it only four notches above a default rating. The move sent the Greek, Irish and Portuguese cost of borrowing to new record highs, while the Spanish cost of borrowing also began increasing again
Meanwhile, eurozone finance ministers will hold an emergency meeting today in an attempt to narrow differences over the structure of a second Greek bailout. The FT reports that the second bailout is likely to reach €85bn, comprised of new loans and private sector involvement, according to EU officials. The main dispute is between the ECB and Germany over the role of private bondholders. Germany wants to force them to swap their current bonds for ones with longer maturities (a bond swap) while the ECB prefers a voluntary purchase of new debt by those holding bonds which expire in the next few years (a bond rollover).
Sources close to the discussions suggested that the ECB line looks more likely to win out as they have hardened their position and continue to receive widespread backing including from France. However, Germany has received backing from both Luxembourg and the Netherlands in recent days. A decision is not expected today but discussions should form the basis for one next week.
NRC Handelsblad reports that Dutch Finance Minister Jan Kees de Jager yesterday confirmed figures cited by Dutch Central Bank Governor Nout Wellink, that a Greek default would cost the Dutch Central Bank around €4bn as a result of losses incurred by the Eurosystem. Open Europe’s Raoul Ruparel appeared on CNBC India discussing the ECB’s exposure to the current Greek crisis. The IHT and the Economist’s Free Exchange blog cite Open Europe’s findings that the ECB has an exposure of €444bn to the PIIGS and holds €190bn in Greek assets.
FT WSJ CityAM EurActiv European Voice Independent Coulisses de Bruxelles Le Monde EUobserver Les Echos Les Echos 2 EurActiv France La Tribune Le Soir SvD Irish Independent IHT Handelsblatt Guardian El Pais Zeit FTD Kathimerini Ethnos Isotimia Ta Nea Eleftherotypia Vima FT 2 FT 3 FT 4 SZ Bloomberg Bloomberg 2 Eleftherotypia 2 Kathimerini 2 Vima 2 Kathimerini 3 Kathimerini 4 Ethnos Irish Independent 2 NRC Handelsblad Report by Dutch Finance Minister to Dutch Parliament Capital Moneycontrol.com Economist blogs: Free Exchange
Roubini: “Even debt reduction will not be sufficient to restore competitiveness and growth”
Writing in the FT, economist Nouriel Roubini argues that “Debt restructuring will happen. The question is when (sooner or later) and how (orderly or disorderly). But even debt reduction will not be sufficient to restore competitiveness and growth. Yet if this cannot be achieved, the option of exiting the monetary union will become dominant: the benefits of staying in will be lower than the benefits of exiting, however bumpy or disorderly that exit may end up being”.
Writing in the WSJ, columnist Simon Nixon argues, “Even if Greece gets its second bailout and avoids default, its problems are far from over. The key vulnerability is the banking system. For all the inevitable focus on possible capital shortfalls, the bigger immediate challenge is liquidity and whether the banks have sufficient funding to support a recovery. This will depend on more European support”.
Handelsblatt: Sinn FT: Kapoor FT: Roubini WSJ: Market Beat WSJ: Heard on the Street WSJ: Hannon
Finland’s government negotiators agreed yesterday on economic and tax policies, reports Yle. Prime Minister elect Jyrki Katainen is confident on having a government ready on Friday, which would mean eurosceptic True Finns will remain in opposition until the next election.
SvD Yle Helsingin Sanomat
Norwegian TV Nrk reports on a recent opinion poll in Norway revealing that 66% are against EU membership, with only 26% in favour. Opposition to EU membership is highest amongst people under the age of 30, with 77% against and only 15% in favour.
Nrk.no T-a.no Hbl.fi Sveriges Television
The Irish Times reports that the EU is considering renewing the Kyoto Protocol at December’s climate summit in Durban – without the participation of the US and other developed countries.
Irish Times
The UK’s Financial Services Authority warned yesterday that the EU’s tough bonus rules make it harder for banks to keep staff.
Reuters Open Europe research
Civil liberties campaigners Statewatch note that an EU survey has revealed that Poland, Germany and Romania issued the highest number of European Arrest Warrants in 2010, while Spain received the highest number of extradition requests. No figures were provided by the UK.
EU Council survey StateWatch
Die Presse reports that Croatians will vote in a referendum in autumn on EU accession. Opinion polls shows 52% of Croatians are in favour of EU accession, while 40% oppose it.
Die Presse
Handelsblatt reports that CDU politician Ruprecht Polenz is worried about Turkish euroscepticism. In an interview with the Rheinische Post he draws the attention to “the mutual responsibilities between Turkey and the EU”.
Handelsblatt:Polenz Rheinische Post
Handelsblatt reports that Mario Draghi will today appear at a hearing at the European Parliament's Committee on Economic and Monetary Affairs, which will vote tomorrow on whether he can become the next ECB President in November.
Handelsblatt
New on the Open Europe blog
Who has been selling insurance against a Greek default? Remember AIG?
Open Europe blog
Bail-outs in the firing line: Another broadside from Frankfurt
Open Europe blog
ECB blues – Open Europe’s response to comments on its recent report
Open Europe blog
Posts
