Thursday, 29 September 2011

Open Europe

Europe

Bundestag votes to approve EFSF expansion;
Merkel secures coalition majority
The German Bundestag this morning voted to approve the expansion of the eurozone’s bailout fund, the EFSF. While the vote had been expected to pass, it was uncertain if the CDU/CSU and FDP coalition was going to have an absolute majority, or whether it would have had to rely on votes from the opposition SDP and Green parties. German Chancellor Angela Merkel needed 311 coalition votes, and ultimately secured 315. In an interview with Les Echos yesterday, CDU politician Wolfgang Bosbach said he would vote against the expansion because it would only buy time without addressing the underlying causes of the eurozone crisis. However, during the parliamentary debate most MPs spoke in favour of the expansion, including senior FDP politician Hermann-Otto Solms, who had been expected to vote against.

Meanwhile, yesterday the Finnish parliament ratified the second Greek bailout and approved the expansion of the EFSF. Slovakian dailyHospodarske Noviny reports that negotiations over the EFSF continue in Slovakia. The Chairman of the Slovakian parliament’s Budget Committee, Jozef Kollar – member of junior coalition partner SaS, which is against expanding the EFSF – has said, “We are looking for a solution that would not block other countries, and, at the same time, would not take any money from the Slovaks’ purses.”

Open Europe's Pieter Cleppe appeared on BBC World Service, arguing, “Even going beyond doubling the EFSF might not be enough to economically stabilise the euro.”

New EU rules on agency workers could put 28,000 young people’s employment contracts at risk
New Open Europe research published today estimates that around 28,000 temporary employment contracts for those aged between 16 and 24 in the UK are under threat from the Agency Workers Regulations coming into force on 1 October, which implement the EU’s Temporary Agency Workers Directive. Open Europe argues that the Government could still delay the introduction of these rules and explore ways to implement them in the lightest way possible.

The regulations come as a major blow at a time when the number of young people (16-24 year olds) not in education, employment or training (NEET) stands at 979,000 and the Government is actively trying to get this age group into work. In May 2011, David Cameron and Nick Clegg announced the creation of new apprenticeships and work placements in private firms. The initiative will aim to provide funding for 50,000 work placements in each of the next two years (100,000 in total). The 28,000 young people with assignments under threat therefore represent half of the work placements that the Government plans to create for the age group in the next year.

Treasury says it will “absolutely resist” proposals for an EU Financial Transaction Tax
The European Commission yesterday put forward its proposal for a Financial Transactions Tax (FTT) across the EU. Under the scheme the tax would be levied on exchanges of shares and bonds at a rate of 0.1%, while the rate for derivative contracts would be 0.01%. The tax would cover all transactions among financial institutions when at least one party is located in the EU. The commission recommended the tax take effect in January 2014. The Commission suggested the plan would raise €57bn annually, but could decrease future EU GDP by between 0.53% and 1.76%.

The UK Treasury said it would “absolutely resist” an FTT unless it was enforced at a global level. Open Europe estimates that an FTT could potentially cost financial markets across the UK between €17.5bn and €58.2bn (£15bn and £49.9bn) and between €24.3bn and €80.9bn across the EU-27.

Open Europe’s Raoul Ruparel is quoted in the LA Times discussing the issue, saying, “It really is a red line for the Treasury and financial services in London…They're reluctant to do this without the US or [without it being] on a global scale.”

Hague: The euro will be a “historical monument to collective folly”
Clegg: Eurozone crisis must not lead to a watering down of the single market
In a strongly worded interview with the Spectator, Foreign Secretary William Hague criticised the creation of the euro saying, “It will be written about for centuries as a kind of historical monument to collective folly,” adding “I described the euro as a burning building with no exits and so it has proved for some of the countries in it.”

Hague said that “Greeks or Italians or Portuguese have to accept some very big changes in what happens in their country…and Germans will have to accept that they are going to subsidise those countries for a long time to come, really for the rest of their lifetimes.” On the UK’s role in the EU, Hague stated, “The EU does have too much power. I haven’t changed that view since being in government; in fact if anything, being in government has reinforced that view. There should be powers that are returned to this country. I think we should be clear in the Conservative party that that is where we are heading.”

Meanwhile, the Guardian reports on Deputy Prime Minister Nick Clegg’s speech in Warsaw today, in which he is expected to argue, “Any change to governance structures must not lead to a weaker and divisive Europe where the aims of ‘Euro ins’ are set against those of ‘Euro outs’. There can be no inhibiting of trade, for example, and no obstructing the single market. Any decision that affects the 27 must always be taken by the 27.”

Greek civil servants occupy ministerial buildings as Troika returns to Athens
The Troika of experts from the EU/IMF/ECB has returned to Athens today. La Repubblica reports that groups of civil servants have occupied several ministerial buildings in the Greek capital, and intend to remain there at least until tomorrow.

Meanwhile, El País reports that the Spanish government has decided to delay the €7bn Initial Public Offering of Spain’s national lottery operator, citing unfavourable market conditions. Separately, several Italian papers have today published the full text of the letter sent by the ECB to the Italian government in August, outlining the measures to be taken in order for the ECB to start buying Italian bonds.

The Irish Times reports that inflation in Germany increased to 2.8% in September, reaching its highest level since September 2008. The unexpected increase could affect the ECB’s decision to cut interest rates next month.

The FT reports that Spain, Italy and France yesterday decided to extend their short selling bans, on the shares of certain banks and companies. The bans will run until 11 November in Italy and France, while Spain said it will only lift the restrictions when market conditions allow.

The French government unveiled yesterday an austerity budget for 2012 targeting €11bn in savings in a bid to safeguard the country’s Triple-A credit rating. The budget plans to end a host of tax exemptions and impose an additional 3% tax on high earners.

Europaportalen reports that the Swedish Riksdag’s Commerce Committee on Tuesday objected to a proposed 3% renovation rate of publicly owned buildings over 250m2 contained in the EU’s Energy Efficiency Directive, due to subsidiarity concerns.

Handelsblatt reports that EU Internal Market Commissioner Michel Barnier is planning to involve in future bank rescues shareholders and creditors who would take “a reasonable share of the losses”, according to a draft EU Directive seen by the paper.

In an article carrying the headline, “Sinful Germans”, FT Deutschland notes that – as part of the EU’s new ‘six-pack’ on economic governance – countries running large export surpluses can receive a 'blue letter' warning from the European Commission.
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European Voice reports that the European Court of Auditors (ECA) has found that 90% of the payments listed as recoveries under the annual Common Agricultural Policy (CAP) budget, which totals €55bn, in fact represented reimbursements from national budgets rather than recoveries from the beneficiaries of undue CAP payments. According to the ECA, this approach decreases the deterrent effect of recovery from those who incorrectly or fraudulently received CAP payments.

The Express reports that French MEP Jean-Marie Cavada has put forward a proposal to teach children in primary schools about the benefits of EU citizenship, which would involve lessons on the EU institutions and the history of the EU becoming part of member states’ national curricula.

New on the Open Europe blog

Hague hits back on the euro

Posted by Britannia Radio at 16:26