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Still no deal to release next tranche of Greek bailout funds as fall of Slovenian government puts expanded EFSF in doubt;
Portuguese PM: If Greece defaults, Portugal may need more financial aid
Despite a second conference call yesterday, the Greek government and the EU/IMF/ECB review team failed to reach an agreement which would allow for the release of the next tranche of bailout funds. Reuters reports that the Greek government will announce further austerity measures, discussed with the EU/IMF/ECB, this afternoon, including accelerated layoffs of state workers, further state pension and wage cuts, and the frontloading of other measures previously agreed. Greek Finance Minister Evangelos Venizelos will attend the annual meetings of the IMF and World Bank in Washington over the weekend in an attempt to finalise the deal.

Meanwhile, the Slovenian government fell yesterday after a no confidence vote, casting doubt over whether the parliament will be able to ratify the expanded role of the eurozone's bailout fund, the EFSF, before a new government is formed following general elections later this year. EUobserver reports that the Slovenian parliament’s finance committee did approve the proposal before the government fell and that the Slovenian parliament could still hold a vote on the issue, although a majority is far from guaranteed without a stable government. Separately, Finland’s Finance Minister Jutta Urpilainen told the press yesterday that the Finnish parliament is “likely” to pass the EFSF expansion next week.

Open Europe’s Raoul Ruparel is quoted in Business Insider discussing the prospect of using ‘enhanced cooperation’ to overcome difficulties in the EFSF, saying, “The EFSF is not part of the EU Treaties and is a separate special purpose vehicle; therefore enhanced cooperation cannot apply to it. Since it is not technically an EU institution it does not fall into the jurisdiction of rules or procedures such as enhanced cooperation. The articles of incorporation for the EFSF highlight that it is a ‘public limited liability company’ based in Luxembourg, not a formal EU body or institution.”

In an interview with Portugal’s public broadcaster RTP, Portuguese Prime Minister Pedro Passos Coelho has warned that his country may need further financial assistance if Greece goes bankrupt, adding, “In a Greek default scenario, this aid could be necessary and it is important that our European partners are convinced that it is worthwhile to help Portugal and, in this case, Ireland too.” Meanwhile, FAZ reports that Bundesbank President Jens Weidmann is planning to hold an informal meeting of heads of European central banks in an attempt to garner support against the ECB’s bond buying programme.

In its latest World Economic Outlook, the IMF cut its growth forecasts, warning that the US and European economies face recession and a “lost decade of growth”. The IMF estimates that Italy will miss its zero deficit target in 2013, while Spain’s recovery will be delayed by a year. Meanwhile, Spain saw the cost of its short-term debt rise to three-year highs at yesterday’s auction. Separately, the front page of El País reports that yesterday around 21,000 high-school teachers took to the streets in Madrid to protest against cuts to education.
BBC EUobserver FT CityAM CityAM 2 WSJ EurActiv Reuters El País EUobserver 2 Bloomberg Les Echos GuardianAFP RTP: Coelho Les Echos 2 EUobserver 3 EUobserver 4 La Stampa Corriere della Sera FT 2 European Voice WSJ 2 FT 3 Reuters Reuters 2 FT 4 CityAM 3 WSJ 3 Irish Times Irish Independent Telegraph Mail Times Guardian Times 2WSJ 4 FT 5 WSJ 5 WSJ 6 El País 2 El País 3 CityAM 4 VN Bloomberg 2 WSJ 7 FT 6 FTD Jornal de Negocios Reuters 3 FAZ Business Insider

Commission sets out plans for wide-ranging criminal policy with minimum EU-wide punishments
EUobserver notes that the European Commission said yesterday it is considering how to set up an EU criminal policy, with clear definitions on what is an EU crime and the minimum punishment to be applied across all member states. Where member states' criminal sanctions “do not yield the desired result”, the EU may set rules on how to ensure implementation possibly including “the requirement for criminal sanctions for breaches of EU law,” says the Commission’s paper.
EUobserver

The Mail reports that, in a private letter to coalition colleagues, Business Secretary Vince Cable has said that although the EU’s Agency Workers Directive will hit businesses, “Our ability to make changes is constrained…amendments we might have made, which did not have the agreement of both [the TUC and the CBI], could be ruled illegal by the courts.”
Open Europe research Mail Telegraph: Brogan

Handelsblatt reports that European Commission officials have confirmed that the planned EU-wide Financial Transaction Tax (FTT) would affect US and Asian banks, as it would also apply to banks based in third countries. EU Taxation Commissioner Algirdas Semeta is due to unveil the proposal in mid-October. The article notes that, at the moment, Italy is firmly opposed to the FTT, along with the UK and Sweden, but a group of member states led by Germany and France could still introduce the tax under so-called ‘enhanced cooperation’.
Open Europe research Handelsblatt

Eurozone comment round-up
A leader in the Times notes, “When Standard & Poor’s downgraded Italy’s credit rating yesterday, it was effectively a downgrade of both Italian and EU politicians – but also a downgrade of the ECB, which through [ECB President Jean-Claude] Trichet’s interventions in the market has become an Italian bondholder.”

Meanwhile, following yesterday’s downgrade of Italian credit rating by S&P, calls for Italian Prime Minister Silvio Berlusconi to resign are increasing in the Italian press. In Il Sole 24 Ore, Chief Editor Roberto Napoletano argues that Berlusconi should “show that he really loves Italy, and that, subsequently, he has the strength and the will to step aside.”

In Le Figaro, economic columnist Marie Visot warns that France’s obstinacy in rejecting the possibility a Greek default is “risky”, adding, “If the default scenario becomes real, Paris will have to face a torrent of criticisms for refusing to acknowledge reality.”

On Conservative Home, Stephan Shakespeare asks, “Where is the political leadership on the euro?”, and argues, “The party conferences really should start discussing Europe again, setting out the options and the likely consequences and then getting people – including their MPs – to really argue it out…Of course it's highly unlikely to happen, which is why we make such bad decisions about Europe.”
FT: Wolf FT: Beattie FT Editorial CityAM: Crow CityAM: Lilico CityAM: Drake WSJ: Stephens WSJ: Hannon BBC: Mason Coulisses de Bruxelles Independent: McRae Le Figaro: Thréard Le Figaro: Visot Le Figaro: Oudéa La Stampa: Sorgi Il Sole 24 Ore Corriere della Sera: Romano Times: Leader Guardian: Elliott Conservative Home: ShakespeareWSJ: Brussels blog FT

A poll conducted by the Forsa Institute for Stern shows that 18% of Germans are in favour of rescuing Greece in contrast with 80% who are against, Spiegel reports. 37% want Greece to leave the Eurozone.
Spiegel

Il Sole 24 Ore reports that EU Competition Commissioner Joaquín Almunia has warned that the situation of the European banking sector has worsened and more banks could need to be re-capitalised on top of the nine that failed the latest round of EU-wide stress tests in July.
Il Sole 24 Ore Irish Independent Telegraph

Following Nick Clegg’s claim that “nobody could have predicted” the eurozone crisis, the Mail argues, “Legions of businessmen and the more sensible politicians and economists…predicted exactly what has come to pass.”
Open Europe research Mail Mail: Leader

The Mail reports that a ruling from the European Court of Human Rights yesterday will prevent the UK from going ahead with deporting a convicted rapist.
Mail

EUobserver notes that the Polish government has told voters that its EU Budget Commissioner Janusz Lewandowski will try to secure more EU funding for Poland, calling into question the oath of neutrality and independence sworn by Lewandowski upon his appointment.
EUobserver

Europaportalen reports that a meeting of EU interior ministers is scheduled to adopt the Passenger Name Records agreement with Australia on Thursday. Under the agreement, nineteen types of personal data from air travellers will be stored and shared for up to five years.
Europaportalen

New on the Open Europe blog

Enhanced cooperation and the EFSF
Open Europe blog

Germany is not the only homeland of eurozone economic ‘hawks’
Open Europe blog

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