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Daily Press Summary Fears over a Spanish bailout cause market turmoil across Europe The eurozone crisis returned to the market yesterday as Spanish borrowing costs rose to their highest levels this year and stock markets across Europe plummeted, with Italian banks posting large falls. The cost of borrowing reached all-time lows for Germany as investors looked for safe havens. The market concerns focused on the significant austerity needed in Spain and the lack of economic growth, as well as fears over the undercapitalised banking sector. Senior EU and Spanish officials took turns to deny that Spain would seek a bailout, insisting that the ECB’s injection of long term liquidity was sufficient to stabilise the country and the eurozone. However, Miguel Angel Fernández Ordóñez, the Spanish Central Bank Governor, said yesterday that Spanish banks would need more capital if the economic situation in Spain turned out to be worse than expected. Le Monde reports that the Italian government will lower growth expectations for this year, as GDP is expected to contract by between 1.3% and 1.5%, instead of 0.4% as initially predicted. FAZ reports that the Bundesbank’s claims to the ECB under Target 2, a payment system used to conduct cross-border financial transfers between eurozone central banks, have reached a record high of €616bn, an increase of €67bn compared with the previous month. FT FT 2 CityAM WSJ EurActiv Irish Independent Telegraph Telegraph 2 Mail Telegraph: Evans-PritchardGuardian Guardian 2 Independent Figaro Figaro 2 Figaro 3 Figaro 4 Les Echos La Tribune European Voice Irish Times FT: Wolf FT: Plender FT Editorial Süddeutsche: Stiglitz Welt Reuters Les Echos 2 Les Echos 3 Les Echos 4 Le Monde European Commission set to release EU growth plan next week The FT reports that the EU Commission is putting the final touches on a detailed growth plan, to be unveiled next week, which calls on national governments to implement a series of job-creating policies, including cutting labour-related taxes, and shifting the burden to property, energy and emissions levies. It will also call on EU members to lift remaining restrictions on the movement of workers within the EU – which the European Commission believes has hampered the movement of skilled labour during the crisis – and create a centralised mechanism to shape and monitor labour market policies. Handelsblatt notes that this ‘growth plan’ put forward by the Commission has been well received by French Socialist Presidential candidate François Hollande, who appears to have conceded that the ‘fiscal treaty’ on eurozone governance can at best be supplemented rather than renegotiated, which he initially advocated. Handelsblatt FT Sarkozy promises tax freeze;  Hollande’s deficit targets depend on 2.5% growth rate  Nicolas Sarkozy has vowed not to increase tax rates if elected at the upcoming French Presidential elections. Meanwhile, Francois Hollande has announced that he is open to the prospect of forming a coalition government with Leftist Front and Green members such as anti-capitalist Jean-Luc Melenchon. He told Le Parisien, “All those who participate in my election will have a right to participate in the French government”. Hollande also revealed yesterday that France would only meet the 0% deficit target he has set for 2017 if the country resumed average growth rates of 2.5% by 2014.  Le Monde Le Figaro L’Express In the Times, Tim Montgomerie argues, “David Cameron ignores UKIP at his peril” and that, “Mr Cameron must stop taking right-wing Eurosceptic voters for granted. He may not like them very much but he won’t stay in No 10 without them.” Times: Montgomerie FAZ reports that the European Commission has set up a project called ‘Neoshield’ which will examine ways in which to protect the Earth from potential large-scale asteroid strikes, which experts believe could happen in 2029.  FAZ In the FT, Chukwuma Charles Soludo, former chief economic adviser to the president of Nigeria, writes, “The EU approach to Africa, via so-called economic partnership agreements, is the equivalent of the 1884-85 Berlin Conference that divided the continent among the great powers.” FT: Soludo Open Europe research Open Europe research 2 The Elgin gas field accident in the UK North Sea makes it more likely that the European Commission will implement stricter licensing and safety requirements on oil and gas companies, Fitch Ratings has suggested. Reuters Iranian media source Al-Alam reports that Iran has suspended oil exports to Spain, following a cut to exports to Greece earlier this week. Spain purchases 12% of its oil from Iran. Le Monde Euractiv reports that the European Parliament is set to clash with member states in the upcoming negotiations on the EU’s Energy Efficiency Directive, as MEPs want the 20% energy efficiency improvements by 2020 to become mandatory, and not voluntary as they are at present. Euractiv.de