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Schäuble: “I rule out Eurobonds”;
Welt am Sonntag: German government opposition to Eurobonds slowly changing
Ahead of a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy, members of both governments seemed to rule out Eurobonds as an immediate solution to the eurozone crisis, the FT reports. In an interview with Der Spiegel German Finance Minister Wolfgang Schäuble said, “I rule out eurobonds for as long as member states conduct their own financial policies and we need different rates of interest in order that there are possible incentives and sanctions to enforce fiscal solidity.” The FT quotes French officials taking a similar line. However, Der Spiegel and DPA report that Sarkozy will push the idea of Eurobonds with Merkel at their meeting tomorrow. Italian Finance Minister Giulio Tremonti called eurobonds the “master solution” to the eurozone crisis.
The debate over Eurobonds featured heavily in the German press over the weekend, with conflicting reports and interpretations of politicians’ comments. Die Welt am Sonntag reports that, despite Schäuble’s comments, opposition towards Eurobonds is turning in government circles, with more officials behind the scenes willing to accept a transfer union in return for stricter rules on spending across the bloc. The FTD reports that the debate could threaten the break-up of the German governing coalition, with the FDP still staunchly opposed to the proposition.
The front page of FAZ reports that the approval of the new powers for the EFSF, the eurozone bailout fund, is also creating tension within the Bundestag, with Speaker of the parliament, Norbert Lammert, warning the government not to put pressure on parliament over the issue. Lammert said, "The issue of the European bailout scheme is so important that the Bundestag cannot debate and decide on this with the necessary care in only a few days".
Meanwhile, in an emergency cabinet meeting on Friday night, the Italian government agreed a €45.5bn package of additional cuts over the next two years in an attempt to meet the ECB’s demands for Italy to have a balanced budget by 2013. The package was welcomed by eurozone leaders but harshly criticised within Italy, with one of the largest trade unions threatening to strike in response. The lack of pro-growth proposals and measures to tackle tax evasion were also points of criticism of the plan.
Le Monde reports that the French government is considering additional budget cuts with proposals expected to be presented on Wednesday. El Pais reports that the Spanish government is planning a new austerity budget aimed at saving €20bn. Separately, the Greek economy shrank again in the second quarter of 2011, although the decline was smaller than in the first quarter.
Open Europe blog FT CityAM Mail Independent Irish Times Expresso Expansion Expansion 2 Jornal de Negocios FT 2 Telegraph Sunday Times Sunday Times 2 Sunday Times 3 Welt am Sonntag Der Spiegel Tagesspiegel Reuters Handelsblatt Reuters Italy Handelsblatt 2 FTD FT Weekend Saturday's Guardian FT 3 CityAM 2 WSJ BBC Saturday's Times Mail on Sunday Il Messagero Reuters Italy 2 Reuters 2 Saturday's Mail FT Weekend 2 Saturday's Guardian 2 Irish Times 2 Irish Times 3 Expansion 3 IHT IHT 2 Le Monde Le Monde 2 Les Echos El Pais FT Weekend 3 FTD 2 Tagesspiegel 2 La Repubblica Bloomberg Handelsblatt 3 Spiegel: Schäuble
Lord Leach: “Northern Europe should make a break for a new mark”
Writing in the Independent on Sunday, Open Europe’s Chairman Lord Leach argued, “EU leaders appear to be facing a stark choice: full fiscal union or fracture into many pieces…So is there a workable alternative to the dilemma of long-term depression in the EU's periphery, or uncontrolled currency disintegration? There is. Germany could leave the eurozone instead, taking Finland, the Netherlands and Austria with it to form a new triple-A German-mark zone. Exiting from the top in this manner would lead to far less panic, reducing the threat of bank runs and contagion”.
He continued, “Britain is not aloof from this choice. We have a powerful economic interest in the least bad financial outcome. We also have a deeper political interest in the democratic solution, which would go a long way to bringing Britain and the Continent into mutual sympathy. Britain has always wanted a Europe based on friendship and co-operation, not on forced and often unwelcome elimination of the diversity that has marked Europe's most enduring achievements. Rather than look on a eurozone break-up as a failure, it should be looked at as a harbinger of a new European settlement in which the wider interest is expressed by allowing citizens and parliaments to choose their own path, sometimes merging institutions, sometimes keeping them separate, as enlightened democracy dictates”.
Independent on Sunday: Leach
In an article looking at the cost of the eurozone crisis, Open Europe’s Pieter Cleppe was quoted in an article in Belgian daily De Morgen saying, “If interest rates remain at the current low level meant to support the European periphery, pensions are under threat as pension funds will struggle to realise the returns they have promised”.
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48% want the Netherlands to leave the euro
A poll commissioned by Dutch newspaper AD found that 48% of those questioned want the Netherlands to leave the euro. Separately, a Maurice De Hond poll published on Sunday showed that 54% of Dutch voters want Greece and other peripheral countries expelled from the eurozone rather than being rescued again. The poll also showed that 60% want the Netherlands to stop lending to other eurozone countries.
Reuters
31% of Germans believe the euro will disappear by 2021
Reuters reports that 31% of Germans believe the euro will disappear by 2021, according to a survey conducted by the German institute Emnid and published by German paper Bild am Sonntag.
Reuters France
Germany is pushing for a Europe-wide ban on naked short-selling
Following four member states’ decision to ban short-selling on Friday, Saturday’s Guardian noted that Germany is pushing for a Europe-wide ban on naked short-selling, while the Chairman of the EU regulator ESMA called on policymakers to come up with a plan for Europe-wide rules on short-selling “as quickly as possible”.Handelsblattquotes German government sources saying, “it should be the goal, at least in eurozone countries, and even better in the whole EU, to take harmonised measures in order to fight speculative actions”.
Handelsblatt Saturday's Telegraph Saturday's Guardian FT Weekend FT Weekend: Authers FT Weekend: Pozen Saturday's Telegraph: Osborne
The Observer reported that David Cameron is under mounting pressure from Conservative and Labour MPs to pledge a referendum on EU membership after the Government decided to back full fiscal union for the 17-nation eurozone.
Observer Express
Train costs could rise by up to 50% under new Commission proposals
The Mail on Sunday reports that a new Commission White Paper on Transport, is proposing that a ‘user pays’ system is created, meaning that passengers would have to cover the cost of all rail travel without government subsidies. Labour has calculated that under the policy, train fares could increase by up to 50%. Labour MP and Shadow Transport Secretary Maria Eagle was quoted saying, “Over the next three years, commuters will see fares rise by as much as a third and many will end up paying a fifth of their salary just to get to work, more than they spend on their mortgage or rent”.
Mail Mail on Sunday
Eurozone comment round-up
In the Telegraph, columnist Ambrose Evans-Pritchard argues that eurozone leaders have three choices this week: “They can agree to fiscal fusion and an EMU debt union, entailing treaty changes and a constitutional revolution. This implies the emasculation of Europe's historic nation states. They can tear up the mandate of European Central Bank and order Frankfurt to go nuclear with €2 trillion of ‘unsterilized’ bond purchases until the M3 money supply in Italy, Spain, Portugal, Ireland, and Greece stops contracting at depression rates and starts to grow again at recovery speed (5pc). This might destabilize Germany. Or they can try to muddle through with their usual mix of half-measures and bluster. This will lead to a rapid disintegration of monetary union and a banking collapse”.
Writing in the Observer, columnist Nick Cohen argues, “Eurosceptics ought to be savouring a moment of triumph. Their fears about the euro have been justified by events. The euphoric hopes of their opponents now appear dangerous fantasies. Not since the collapse of communism has an argument been settled so decisively”. Writing in the FT, George Soros proposes three steps to resolve the eurozone crisis: “Reform and recapitalisation of the banking system; a eurobond regime; and an exit mechanism. Writing in Handelsblatt, Oxford Professor Clemens Fuest warns against eurobonds arguing, "The eurozone would be wandering into a centralised state, with a lot of powers, without being democratically legitimate".
City AM Editor Alistair Heath argues, “Short-term, eurobonds, federalised debt and central bank purchases of toxic bonds will prevent a catastrophic, uncontrolled break-up of the euro which would trigger another recession. Long-term, the backlash will be cataclysmic. The only sustainable solution is a controlled, managed break-up of the euro. The UK is backing the wrong horse.”
Independent on Sunday: Leach Observer: Cohen Telegraph: Evans-Pritchard FT: Dizard City AM: Heath City AM: Meehan WSJ: Stelzer Sunday Times: Dey Spectator: Coffee House Spectator: Coffee House 2 FT Weekend: Editorial Sunday Telegraph: Das Sunday Times: Stelzer El Pais: Quero Reuters: Breaking Views FT: Soros Handelsblatt: Ziesemer Handelsblatt: Fuest
In the Sunday Times, Charles Clover argued that recently enforced EU rules ensuring scallops are sold dead rather than alive are “an insult to common sense” calling it a “toxic” regulation.
Sunday Times
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