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New on the Open Europe Blog Commission's efforts to reform EU budget actually make things worse Open Europe Blog The battle for the heart and soul of the ECB continues Open Europe Blog If he wants to maintain EU allies, David Cameron needs to set out a clear vision for Britain’s plac Open Europe Blog
Daily Press Summary German insurers warn of higher inflation Later today, representatives from eight of Germany’s leading economic institutes will present their joint spring economic forecast to the government. The experts will warn that the actions taken by the ECB throughout the crisis, most notably large-scale purchases of government bonds and the ‘unlimited’ liquidity provided to eurozone banks, have put its "independence and credibility at risk”. Separately, Die Welt reports that the ECB has also come under fire from German insurance companies, which have warned that the bank’s crisis management strategy is threatening the profitability of private pensions as higher inflation results in lower yields, hitting savers. The FT reports that John Paulson, who heads Paulson & Co which manages $24bn in assets, has said that he is shorting German bunds in the expectation that the eurozone crisis will worsen significantly this year, mostly down to the growing problems in Spain. Meanwhile, Handelsblatt reports that Christoph Degenhart, a judge at the German Constitutional Court, has criticised German President Joachim Gauck for his assertion yesterday that any legal challenges against the ESM treaty and/or the ‘fiscal treaty’ would not be successful, arguing that the Presidency "should be aware of the independence of the judiciary and be cautious with such predictions". Open Europe blog Welt FAZ Welt 2 Süddeutsche: Gammelin Welt 3 Handelsblatt European Voice reports that the EU Commission will propose that the EU’s 2013 budget should be increased by 5% compared to the 2012, a level likely to be opposed by a number of EU states. The paper believes that the proposal will start a proxy battle over the size of the EU's multi-year spending programme for 2014-20. European Voice Spanish banks’ bad loans hit highest level since 1994 The WSJ reports that the impact of the ECB’s Long-Term Refinancing Operation may be waning in places such as Spain, as banks are already running low on funds to invest in domestic government bonds given the large outflow of deposits and their own refinancing needs. The Bank of Spain released data yesterday showing that the level of bad loans held by Spanish banks reached €144bn, 8.16% of total loans, the highest level since 1994. The Spanish Public Works Ministry reported that Spanish house prices fell by 7.2% in the first quarter of 2012 compared to a year earlier, with further declines expected. The FT covers a report by Fitch, due to be released today, which highlights that repossessed homes in Spain are selling for half their original value, much lower than the valuations given to them in official statistics. Despite these problems, Spain successfully auctioned €2.54bn in long term debt this morning with strong demand, although yields rose slightly for ten-year bonds. Given that the auction was broadly in line with expectations, market reaction has been muted so far. Open Europe's briefing showing that one in five loans to the real estate and construction sectors in Spain is potentially toxic and that Spanish banks may eventually be forced to seek a bailout from the European Stability Mechanism, was cited by leading Swedish business magazine Affärsvärlden. Open Europe research WSJ FT CityAM WSJ WSJ 2 Telegraph Irish Times EurActiv Affärsvärlden IMF: European banks could shrink their balance sheets by €2 trillion; Italian government admits it will not balance its budget by 2013 In its Global Financial Stability Report published yesterday, the IMF warned that European banks could shrink their balance sheets by €2 trillion (equal to 7% of their assets) over the next 18 months. The IMF predicts this would lead to the supply of credit to the real economy shrinking by 1.7%. However, José Viñals, Director of the monetary and capital markets department at the IMF, noted that “restructuring is fundamental,” adding that banks that were “not viable” had to be closed. IMF Director Christine Lagarde has said that the IMF had received pledges for $320bn in new funds, still short of its aim of $400bn. Il Sole 24 Ore reports that the Italian government yesterday confirmed that it will not be able to achieve a balanced budget by 2013 – a commitment made by former Italian Prime Minister Silvio Berlusconi. Le Monde reports that one thousand people gathered in Rome yesterday to protest against recent suicides which they claim are linked to the eurozone crisis. A new Pulse poll shows that, if elections were held now in Greece, New Democracy and PASOK would together secure 151 out of 300 seats in the Greek parliament. Kathimerini notes that Greece’s six main parties yesterday agreed to award themselves €10m to cover their election costs – the same amount they received in 2009, before the crisis broke out. The WSJ reports that Greece may delay decisions on recapitalising its banks until after the elections. Speaking on Newstalk radio’s Breakfast programme this morning, Irish Minister for Jobs, Enterprise and Innovation Richard Bruton said a second bailout for Ireland was a possibility. FT CityAM Times Guardian Telegraph IMF Report Guardian CityAM Dow Jones Twitter: Newstalk BreakfastIl Sole 24 Ore Il Sole 24 Ore 2 EUobserver IHT Le Figaro FT 2 CityAM 2 WSJ BBC El País ExpansiónExpansión 2 Cinco Días: Reding Kathimerini Kathimerini 2 Kathimerini 3 Kathimerini 4 Le Monde WSJ 2European Voice Telegraph: Warner Fitch: Netherlands could lose its Triple-A rating The Telegraph reports that Fitch has issued a warning that the Netherlands could lose its AAA rating if it fails to deliver austerity cuts or lets political conflict intrude on economic management. Elsevier reports that Dutch negotiations on its 2013 budget are unlikely to be concluded this week. Meanwhile, Dutch academics Harrie Verbon and David Hollanders have an article in De Volkskrant arguing that "the budget cuts of the cabinet are fake solutions. Netherlands has billions of euros in guarantees to Southern Europe…[this is] the real problem". Telegraph Z24 Stentor Elsevier 23% French voters undecided; Sarkozy’s campaign falters A new OpinionWay poll for Le Figaro reveals that up to 23% of French voters remain undecided, three days before the first round of the presidential election. Low turnout and undecided votes could thwart current poll predictions. The FT reports that recent polls suggest Nicolas Sarkozy’s campaign has stalled, as he fails to convince voters that he has a stronger economic programme than socialist frontrunner Francois Hollande. FT Telegraph Guardian Guardian: Leader Guardian: Kettle Le Figaro La Tribune The latest Irish Times/Ipsos MRBI poll shows that the outcome of the referendum on the ‘fiscal treaty’ due to be held on May 31 is wide open, with 30% in favour, 23% opposed and 39% undecided. Irish Times Chris Grayling: We need to repatriate powers from the EU In an interview with the Spectator, Chris Grayling, Employment Minister, has stated that he is in favour of repatriating powers from the EU: “All of us believe that in areas like employment law we want powers back in London. But right now, we are not in that position.” He added that new Government work experience schemes – only open to people who have been on benefits for a period of time – were targeting the young British unemployed, who are often competing with eastern Europeans for similar jobs. Open Europe research Euractiv reports that MEPs have backed a report calling for a new EU position of “human rights czar”. Euractiv The Parliament Switzerland has said it will re-impose immigration quotas on workers from the newer central and eastern EU member states, citing a “safeguard clause” in its bilateral treaty with the EU on free movement. BBC EUobserver Ashton’s statement EU Commission President José Manuel Barroso yesterday criticised the Dutch government’s recent calls to cut €10bn from the European Development Fund and the EU's Globalisation Adjustment Fund, claiming that: "I honestly don't understand how it's possible at this very difficult time for Europe that governments argue in favour of spending cuts in European programmes”. AFN Votewatch reports that on April 26, MEPs will vote on whether to make future voting behaviour in parliamentary committees available to the public, and also that since the entry into force of the Lisbon Treaty, the number of legislative dossiers concluded at first reading has shot up to 90%, compared to just 20% in 2000. Votewatch press release Conservative Peer Lord Ashcroft writing on ConservativeHome argues that “UKIP is a threat but a Conservative Party with a clear sense of direction can see it off”. Conservative Home: Ashcroft Conservative Home: Howarth Hungary yesterday tabled an amendment aimed at increasing the independence of its central bank following a warning by the European Commission that it would pursue legal action if the law was not changed. EUobserver Les Echos