Expansión reports that Spanish Interior Minister Jorge Fernández Díaz said yesterday that Spain’s public deficit could be 8.2% of GDP at the end of 2011, well above the target of 6%. If this is the case, the government would need to cut the deficit by around €38bn this year to comply with the 4.4% target for the end of 2012. The Spanish government already adopted a package of spending cuts and tax hikes worth €16bn last week. CityAM reports that former Dutch Central Bank Governor Nout Wellink has criticised the ECB’s on-going provision of unlimited liquidity to banks, saying, “Three years is simply too long. That is no longer liquidity support but solvency support.” Wellink added that he expected the official loans to Greece to be written down at some point, forcing the EU and ECB to take losses. Meanwhile, over the Christmas period FT Money Supply blog reported that much of money released by the ECB’s recent long term lending operation looks to have been deposited back into the ECB, with banks deposits at the ECB reaching record highs. The impact of the long term lending on purchases of sovereign debt also seems to have underwhelmed markets, despite Italian borrowing costs falling slightly at a bond auction last week. EUobserver reported that the Greek general election has been moved back from 19 February to later in the spring, with 15 April set as the latest it can be held. In an interview with Skai TV, Greek government spokesman Pantelis Kapsis warned that the latest “bailout agreement needs to be signed otherwise we will be out of the markets, out of the euro.” Separately, the Greek official charged with tackling tax evasion in Greece is being charged with breach of duties after he failed to impose €15m worth of fines on fuel smugglers. Separately, writing in yesterday’s Handelsblatt, former president of the Federation of German Industries, Professor Hans-Olaf Henkel, describes Chancellor Angela Merkel’s claim that “if the euro fails Europe fails” as a “fallacy”, arguing that “the guarantor of peace is democracy and not the euro…The increasingly undemocratic attempts at crisis management – the constant meddling of German politicians in the affairs of other countries, the limitation of the budgetary control of member states’ parliaments by un-democratically elected centralist supervisors – are leading to a dangerous erosion of democracy.”Open Europe Europe
Tuesday 3 January 2012
European leaders’ New Year messages warn of bleak outlook for eurozone;
Spain set to miss 2011 deficit target by 2% of GDP
German Chancellor Angela Merkel and French President Nicolas Sarkozy will hold a preparatory bilateral meeting on 9 January in Berlin to discuss ahead of the upcoming EU summits at the end of the month. The FT reports that talks will include discussion for a ‘road map’ to Eurobonds after the European Parliament put forward such a proposal last week. Meanwhile, in their New Year addresses both leaders warned of a bleak outlook for the eurozone, but reaffirmed their commitment to keeping the bloc together. David Cameron also spoke about the eurozone crisis warning that the UK could only secure “some protection” from the “debt storms” in the single currency area.
An article in FAZ argues that eurozone exit can be achieved, and although it “will be difficult and expensive” this must be considered in comparison to “how high the price of saving the euro is.” In an interview with Der Spiegel, German Constitutional Court judge Udo Di Fabio notes that Eurobonds without a Bundestag veto would create a “democratic problem”.
Expansión Expansión 2 Expansión 3 Cinco Días FT CityAM WSJ European Voice La Stampa La Stampa 2 FT 2 FT 3 WSJ 2 Monday's FT FT 4 Monday’s Guardian BBC CityAM 2 FT Money Supply EUobserver CityAM 3 RNW FD De Dagelijkse Standaard ORF Reuters Telegraph BBC 2 Sunday Telegraph Sunday Telegraph 2 Irish Times WSJ 3 WSJ 4 Monday’s Telegraph Monday’s Mail Express Irish Independent FT 5 Mail Sun FAS FAZ Spiegel FT Editorial WSJ: EvansWSJ Heard on the Street Telegraph Reuters
Conservative and Lib Dem MPs to try and reach compromise on EU agenda
The Guardian reports that informal talks between Conservative and Lib Dem MPs are being planned in order to try and agree a common agenda on Europe. The move follows warnings from a number of senior Lib Dems that the party cannot afford to be seen as “obsessively pro-European.” The paper also reports that Deputy Prime Minister Nick Clegg has instructed his office to draw up a list of powers that could be returned to national parliaments from Brussels.
Meanwhile, on his Telegraph blog, Conservative MEP Daniel Hannan notes that British officials who attended an initial meeting on the new EU fiscal treaty “were said to have raised no objection to the proposed use of EU mechanisms and procedures” by the member states that will join the pact.
Former German President: Eurozone crisis could threaten democracy
In an interview with the German Bundestag’s weekly paper, Das Parliament, former German President and former Chairman of Germany’s Constitutional Court, Roman Herzog, warned that the eurozone crisis could be a threat to democracy. He also argued that “the EU was not conceived as a super state. It will not work. We live in a world which depends on flexibility and the individual initiatives of states. Even today the EU is hamstrung by the masses of rules produced by Brussels...First of all around half of the 70,000 pages of EU regulations ought to be repealed.”
In the Telegraph, International Business Editor Ambrose Evans-Pritchard argues, “The shrinking AAA core will leave Germany propping up the EFSF bailout fund until the weight of contingent liabilities endangers Germany itself…Germany will not be able to fudge EMU any longer. It must either immolate itself, accepting a debt union and internal inflation to save a currency it never wanted and doesn't love; or opt instead to uphold fiscal sovereignty and the essence of its own democracy, and let the Project die.”
Following the news that EU member states have decided to take the European Commission to the ECJ over its proposed 1.7% pay increase for EU civil servants, Open Europe's estimate that about 17,500 EU officials, or around 40% of the total staff, earn over €6,500 per month is quoted in Belgian dailies Het Nieuwsblad and De Morgen, Dutch daily De Telegraaf and Dutch magazine Elsevier.
A German government source told Reuters that Germany wants the billions of euros that have not been tapped from the EU’s structural funds to be channelled into a separate fund aimed at boosting growth in ailing eurozone countries.
MoD raises concerns over new EU Victims of Crime Directive
The Telegraph reports that the Ministry of Defence has warned that a proposed new EU Directive opted-into by the government, which sets common standards for the treatment of alleged victims of crime, could place damaging new burdens on Armed Forces personnel around the world. MoD lawyers believe that, as it is currently drafted, the directive – which the Government has opted in to – would oblige the Services to offer additional counselling and other services to people alleging they had been mistreated by British personnel, either off-duty or during official operations. It is understood that Britain will argue in favour of limiting the applicability of the rules to EU member states nationals within the EU.
The Telegraph reports that a survey by PwC has found that nearly 90% of chief executives in the financial services industry plan to expand their operations in Brazil, Russia, India and China.
A report by Civitas published today warns that the extension of the EU’s Carbon Emissions Trading System to cover the aviation industry, effective from 1 January, will result in higher prices for consumers and a “major artificial competitive advantage” for non-EU airports such as Geneva, which could potentially displace Heathrow, resulting in lost jobs and missed business opportunities.
Denmark took over the six-month EU rotating Presidency on Sunday.
Hungary’s controversial new constitution, which officially changed the country’s title from “republic” to “country of the Hungarians”, came into force on 1 January. Concerns have also been raised about the country’s new electoral law, as well as the independence of the judiciary and the central bank. The Sunday Times noted that reforms which contravene EU law may result in Hungary’s suspension from the EU Council of Ministers.
The Mail on Sunday reported that a cross-party group of parlamentarians is planning to present the BBC’s Director of News, Helen Boaden, with a dossier of evidence of alleged pro-EU bias by the corporation.
The Sunday Telegraph reported that David Cameron’s plans to introduce minimum prices for alcohol in an effort to combat excessive and anti-social drinking may be incompatible with EU single market rules on anti-competitive measures.
The Express reports that the European Commission allegedly wants to scrap VAT exemptions on food, children’s clothes and other essentials in an attempt to harmonise the sales tax across Europe.
The Sunday Telegraph reported that Abdullah Munawar, a trainee accountant from Bangladesh, won his appeal to stay in the UK after a judge ruled that the fact he had made friends with fellow students and work colleagues, worshiped at a local mosque and played cricket on Sundays constituted a “private life” under Article 8 of the European Convention of Human Rights.
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