On his Straneuropa blog, La Stampa’s Brussels correspondent Marco Zatterin notes that the latest draft softens the rules on the reduction of public debt in excess, something which Italy was particularly keen on. In return, Germany has obtained that the wording of the section on coordination of national debt issuance be watered down. German magazine Focus notes that the “Budgetary Pact has already been softened”. Meanwhile, ahead of his meeting with German Chancellor Angela Merkel today, Italian Prime Minister Mario Monti called for the EU recognise the effort Italy is making, saying, "Despite these sacrifices we do not see concessions from the EU, such as in the form of lowered interest rates...I cannot be successful with my policies if the policies of the EU do not change. If that doesn't happen, Italy -- which has always been a pro-European country -- could flee into the hands of populists." Separately, in a blow to the unelected government, cabinet undersecretary Carlo Malinconico resigned yesterday following controversy over the acceptance of paid holidays from a businessman accused of corruption. Der Spiegel reports that, according to leaked memos, the IMF is having doubts over the Greek restructuring plan due to the slow pace of reform and fears that the participation rate in the voluntary restructuring will not be high enough to return Greek debt to a sustainable level. Irish Education Minister Ruairi Quinn insisted that Ireland will be able to return to the markets by the end of next year as scheduled after Citigroup predicted that Ireland will need a second bailout. The Irish Independent reports that the IMF/EU is pushing Ireland to raise €5bn through asset sales, although the government is reluctant to go beyond €2bn. The article also suggests that the IMF/EU team is split over whether to consider some debt restructuring for Ireland.Open Europe Europe
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Wednesday, 11 January 2012
Open Europe reveals third draft of European fiscal pact;
Reference to single market removed and role of ECJ watered down marking potential victory for Cameron
Open Europe was this morning the first to publish the third draft of the European ‘fiscal compact’. Following last week’s meeting of negotiators from EU member states, the third draft has removed the reference to “deeper integration in the internal market” as one of the objectives of the agreement, marking a potential victory for David Cameron who has consistently argued against any overlap between single market rules and the new pact. EU member states have also backtracked on the role of the ECJ, which is now again limited to control over national governments’ implementation of the balanced budget rule, as opposed to a wider role in enforcing the rules as envisioned in the previous draft. This marks a potential concession by Germany to France. Under the latest draft, the European Commission would no longer be allowed to take a member state to the ECJ. The number of ratifications required for the pact to entry into force has been brought down to 12 from 15, amid concerns that some countries, such as Finland and Ireland may have difficulties in getting the deal through their respective parliaments.
Meanwhile, Danish Finance Minister Margrethe Vestager said yesterday that Denmark is “negotiating [the new European treaty] in order to be able to join.” However, Vestager warned that it would be almost impossible for Denmark to alter its constitution to include a golden rule as the treaty is likely to demand. She also said that the Danish government currently disagrees with the method for calculating the balanced budget and deficit rules.
Fitch warns that Italy may be downgraded by the end of the month but France’s triple-A is safe for 2012
The head of sovereign ratings at Fitch, David Riley, warned yesterday that "Italy is the front line of this crisis," adding that the credit rating agency is likely to downgrade Italy by the end of the month. Riley further warned that Italy faces a daunting task to meet its target of raising €440bn in 2012 through selling bonds and bills. Riley also said that France will not face a rating downgrade from Fitch in 2012.
The Portuguese Central Bank yesterday said that it expects the Portuguese economy to contract by 3.1% this year, a much sharper recession than previously forecast. In his first interview since becoming Spanish Prime Minister, Mariano Rajoy warned that more austerity was necessary for Spain to maintain the confidence of the markets and international partners.
CityAM WSJ Reuters CityAM 2 European Voice European Voice 2 Le Parisien WSJ 2 Le Figaro IHT Irish Times WSJ 3 CityAM 3 FT FT 2 FT 3 Welt Irish Independent Irish Independent 2 Guardian Irish Independent 3
Economic impact of FTT could be up to four times higher than estimated by EU Commission
The FT reports that according to analysis from economic consultancy Oxera, a “more realistic” impact of a potential Financial Transactions Tax would result in a 2% cut to GDP compared to the EU Commission’s assessment of a 0.53%, negating the Commission’s forecast of €37bn in revenue from the tax. City AM also reports opposition to the FTT from EU Presidency holder Denmark, whose Economy Minister Margrethe Vestager warned it will “cost hundreds of thousands of jobs”.
The FT reports that European Competition Commissioner Joaquín Almunia may veto the proposed merger of NYSE Euronext and Deutsche Börse unless they agree to sell one of their main derivatives businesses Liffe or Eurex. The Times reports there is likely to be relief amongst London market users but if the decision were changed in its final ruling on 9 February there could be political ramifications in Britain.
The BBC reports that more than a million people have signed an online petition urging the EU to limit the transport of live animals to journeys of up to eight hours.
Scottish First Minister Alex Salmond announced that he intends to hold a referendum on Scotland’s possible independence from the UK in 2014, although its scope and legal grounding are yet to be determined. Speaking in Parliament yesterday, Scottish Secretary Michael Moore said that Scotland's membership of the EU in the event of independence "cannot be taken for granted".
A government commissioned report from the Migration Advisory Committee has found that migration to the UK from within the EU has had “little or no impact on the native employment rate”.
The Euro Fiscal Pact saga continues, now with better news for Cameron
Greece-ing the wheels in preparation for a forced write-down?
First Ministerial scandal for Monti’s government: Et tu Technocrat?
What a Ski Slope in ‘the world's flattest country' says about EU Funding
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