Europe
Confusion is growing over the details of Italy’s second austerity package after the Italian government scrapped a pension reduction plan agreed on Monday, which was expected to raise at least €1.5bn, following pressure from junior coalition partner Lega Nord. The amount of money now ‘missing’ from the original package is now between €7bn and €8bn. Meanwhile, Portugal yesterday announced a new set of austerity measures, aimed at bringing the deficit close to zero within five years. Portuguese Finance Minister Vítor Gaspar said that he expected Portugal to return to growth in 2013 and that the debt-to-GDP ratio would peak at 106.8% in the same year. According to a report produced by a committee of experts, appointed by the Greek Finance Ministry, the government may miss its deficit targets even if it fully implements all the current austerity measures. Despite this, EU Economics Commissioner Olli Rehn said, “Greece’s debt is on a durable declining path”, according to Bloomberg. Kathimerini reports that French and Belgian banks are reluctant to commit debt maturing after 2020 to the second Greek bailout, casting further doubts over whether the plan for private sector involvement can reach the desired contribution threshold. The WSJ reports that Piraeus Bank, the fourth largest Greek lender, has admitted to accessing the Emergency Liquidity Assistance (ELA) this quarter, the first bank to openly do so.
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Open Europe
Thursday, 1 September 2011
EU light bulb ban further increases cost of energy-saving lamps by 20-25%
Manufacturers have signalled that they intend to raise the price on energy-saving lamps in Germany by 20-25%, following today’s EU ban on 60-watt light bulbs. The manufacturers say that increases in the costs of raw materials from China are to blame for the rise. Osram CEO Martin Goetzler told FTD the price increases of 20-25% will apply from today. Philips also intends to raise prices of energy-saving lamps by 20-25% in Germany over the coming months, a company spokesperson told Welt.
IMF and Eurozone at loggerheads over bank recapitalisation;
Greece may miss deficit targets even under full implementation of austerity
The IMF has angered eurozone leaders and the ECB, after it leaked a draft version of its Global Financial Stability Report, which included estimates on the recapitalisation needs of European banks. The report suggests that, if sovereign debt holdings of European banks were marked to their current market value, €200bn of European banks’ capital could be wiped out. The FT quotes Elena Salgado, Spanish Finance Minister, saying, “The IMF vision is biased…They only see the bad part of the debate.”
Expansión reports that Catalonia has rejected the Spanish government’s plans to introduce deficit and debt limits in the Constitution, arguing that only the Catalonian Parliament has the power to impose such limits on the region.
FT Reuters Handelsblatt Presse CityAM WSJ WSJ 2 El País FAZ Repubblica Corriere della Sera Corriere della Sera 2 Il Tempo FT 2 WSJ 3 Times Times 2Jornal de Negocios FT 3 WSJ 4 BBC El País El País: Passos Coelho Handelsblatt FT 4 WSJ 5 EUobserver Expansión Welt Elsevier Fiscaal FAZ 2 Le Parisien Le Point Kathimerini Kathimerini 2 Le Monde Zero Hedge Reuters Les Echoes Le Point 2 Tribune de Genève Tribune de Genève 2 Le Monde 2 Le Soir
Miliband calls for “euro-wide debt guarantees”
In an op-ed in the FT, Labour Party leader Ed Miliband argues, “The eurozone itself should do more to support growth. Countries with large deficits and high borrowing costs need to take action to reassure investors. Under market pressure, Italy and Spain are already on that path. But their strategy will work only if there is some system of euro-wide debt guarantees.”
In a letter to the FT, the leader of Liberal MEPs Guy Verhofstadt says that, with the abolition of the single currency, “The likelihood would be that monetary obstacles, foreign exchange rates and possibly even border controls would be reintroduced, as nationalism once again took hold across the continent. Within a fairly short time we would witness a dismantling of the internal market.”
FT Editorial FT: Miliband FT: Robinson FT Letters: Verhofstadt WSJ Heard on the Street WSJ Review&Outlook El País: Vidal-Folch Corriere della Sera: Ainis La Stampa: La Spina La Stampa: Sorgi Il Sole 24 Ore: Orioli Il Sole 24 Ore: Barba Navaretti
Commission President Jose Manuel Barroso will meet with leaders from Australia, New Zealand and Singapore next week, in a bid to try to convince these countries to introduce a financial transaction tax, similar to that which the Commission has proposed, reports Europaportalen.
EUobserver reports that yesterday MEPs on the International Trade Committee backed a pending agreement between the EU and the Palestinian Authority that would allow farms and fisheries duty-free access to the European market.
EU Home Affairs Commissioner Cecilia Malmström argues in the FTD that immigration from third world countries is necessary to secure the future of European social systems. Malmström suggests that legal hurdles for skilled workers from third world countries should be lowered and that the EU should institute a common immigration policy to effectively manage migration flows.
A book will be published in France today, in which French judge Isabelle Prévost-Desprez claims that French President Nicolas Sarkozy personally received envelopes with cash from L’Oréal heiress Liliane Bettencourt during his electoral campaign in 2007. The judge maintains she heard evidence of this from Mrs Bettencourt’s nurse. However, in an interview with French weekly Marianne, the nurse denies having ever named Sarkozy to the judge.
The Mirror suggests that a loophole in EU law means the government could award the £1.4bn Thameslink train deal to British-based Bombardier, rather than to German firm Siemens, since Siemens could be disqualified under a “fit and proper” test, following a bribery scandal in 2009.
France will today host an international high-level conference on the future of Libya. European Council President Herman Van Rompuy, Commission President José Manuel Barroso and EU Foreign Minister Baroness Catherine Ashton have all been invited.
Regling goes loopy: Plan for using Greek banks shares as collateral for Finland is unworkable
Juppe’s Polemic: French Foreign Minister suggests break-up of eurozone could threaten European peace
Why coffee machines are making Le Monde lose faith in the Commission
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