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Wednesday, 3 August 2011
Italian and Spanish leaders scramble to appease financial markets
The cost of borrowing for Italy and Spain increased significantly yesterday – and has continued its rise this morning – sending politicians scrambling to find a way to appease financial markets over their fears of contagion from the eurozone debt crisis. Leading Italian banks also continued to struggle with their stock prices falling again yesterday. Giulio Tremonti, Italian Finance Minister, called an emergency meeting of the Financial Stability Board yesterday, which released a statement reiterating that the Italian economy is “solid” and blamed increasing borrowing costs on “international uncertainty”. Tremonti will also meet Jean-Claude Juncker, Head of the Eurogroup, today to discuss the crisis. Italian Prime Minister Silvio Berlusconi will break his silence over Italy’s economic problems by addressing both Houses of the Italian Parliament today. Il Corriere della Sera reports that the speech has been delayed until 5pm, after the markets have closed. The FT reports that calls are growing within the Parliament for Berlusconi and Tremonti, both currently embroiled in scandals, to step down.
Meanwhile, Spanish Prime Minister José Luis Rodríguez Zapatero delayed his holiday yesterday, in order "to more closely monitor the evolution of the economic indicators” according to a government spokesman, and will hold an emergency meeting with Finance Minister Elena Salgado this afternoon. The FT reports that European officials have stepped up their efforts to produce a text for the expansion of the European Financial Stability Facility in the next few weeks, so that it can be ratified by eurozone parliaments as soon as they return from recess.
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Open Europe Director Mats Persson appeared on BBC Newsnight discussing if the Conservative party's stance on Europe is changing with the 2010 intake of MPs and if the eurozone crisis can be an opportunity for the UK to renegotiate its relationship with the EU. “The new intake [of Conservative MPs] instinctively feels that something is wrong in Europe, that we need to see reform. But they don’t want to withdraw altogether, they want to find a third way between withdrawal and the status quo,” he argued.
Eurozone comment round-up
In the WSJ, Simon Nixon warns, “Following the latest twist in the euro crisis, Spain may have lost the benefit of time. By the time voters go to the polls on November 20, Spain's fate may have been decided elsewhere.” Wolfgang Münchau argues in the FT Deutschland, that “a transfer union of sovereign states would be unacceptable”, stressing that, “No taxation without representation…is a principle that is part of every democratic constitution. This principle would be violated if the Greek state is able to take on debt and the German taxpayer has to clear it.”
FTD: Münchau Welt: WeberWSJ: Nixon WSJ: Review&Outlook WSJ: Heard on the Street Le Monde: Van Rompuy Le Figaro: Leonetti Le Figaro: RousselinTimes: editorial El País: Díez Il Sole 24 Ore: Gentili Il Sole 24 Ore: Guiso & Zingales La Stampa: Lepri Corriere della Sera: Giavazzi Corriere della Sera: de Bortoli
Writing in the IHT, Daniel Korski and Mark Leonard from the European Council on Foreign Relations warns that, if upheld for a full year, the EU’s ban on the import of Egyptian fenugreek seeds could block 10% of Egypt’s agricultural exports. The ban was put in place following the e-coli outbreak.
An editorial in the FT speaks critically about the Commission’s proposed Capital Requirements Directive (CRD) IV arguing, “First, it waters down the Basel III guidelines on bank capital, encouraging banks to pad their balance sheets more thinly. Second, it prevents member states from going further than the minimum requirements set”. It continues, “What the continent requires is a route back to fiscal and financial stability. The last thing it needs is for the European Commission to undermine that process with a crude power grab.”
The Commission has issued a warning to the Bulgarian telecommunications regulator, calling for it to address the inflated prices of mobile calls, reports EurActiv.
Euractiv reports EU regulators are now formally investigating nine antitrust complaints against Google, with one source claiming that the complaints have been lodged by small companies. If found guilty, the Commission can fine companies up to 10% of their global turnover for breaching EU rules.
The eurozone crisis doesn’t take holidays…: contagion fears hit Italy and Spain
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