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New on the Open Europe Blog Bavarians are getting increasingly restless over eurozone bailouts Open Europe Blog Struggling to keep up to speed with the latest on Spain? Just read this... Open Europe Blog Regional debt, national problem: Is Spain heading for a full bailout? Open Europe Blog
Daily Press Summary Global markets rally as Draghi hints at greater ECB intervention to aid eurozone ECB President Mario Draghi yesterday said, "Within our mandate, the ECB is willing to do whatever it takes to preserve the euro and, believe me, it will be enough." Draghi also added, “To the extent that the size of the sovereign premia hamper the functioning of the monetary policy transmission channels, they come within our mandate,” the first time Draghi has attempted to offer a justification for the ECB intervening to bring down government borrowing costs in the eurozone. Markets rallied across the globe on the back of the comments, whilst the euro strengthened significantly against the dollar and Spanish ten year borrowing costs dropped by 0.45%. Writing in Die Welt, economics correspondent Jörg Eigendorf argues that “The ECB thus emerges as a Trojan horse. It no longer stands for stability and the adherence to principles, but for a Europe in which the South has the final say. The result will be a gigantic redistribution at the expense of the North - without any of the underlying problems being solved.” FT FT 2 FT 3 WSJ CityAM Times Guardian Guardian 2 BBC European Voice Irish IndependentSüddeutsche FAZ Independent IHT Irish Times Le Figaro Telegraph EUobserver Il Sole 24 OreRepubblica FT: Masters WSJ 2 Guardian: Pratley Welt: Eigendorf Ruparel: Spain faces bigger problems than regional debt; Unemployment in Spain reaches its highest level since 1994 Writing in City AM, Open Europe’s Raoul Ruparel argues, “There is no doubt that [Spanish] regions have problems, but they will not make or break Spain financially…The main concern should be that, with Spain continuing to miss deficit targets, it is losing the trust of Eurozone leaders and financial markets. Questions over whether Spain can control its regional spending over the medium and long term will also linger.” He goes on to argue, “Combine [the regional problems and Spain’s financing needs of €542bn over the next three years] with a bank rescue package that is struggling to get off the ground, sky-high unemployment and swingeing budget cuts, and it is hard to see how some form of financial aid for the Spanish state will be avoided – especially if borrowing costs begin rising again.” Raoul concludes, “Spain’s regional problems will not be the main cause of any future bailout. That will come down to poor economic policies and a botched banking sector rescue. But Spain’s regions could well be the trigger for further crisis.” Open Europe’s new briefing, which estimates that taking Spain out of the bond markets for three years through a Greece-style bailout would cost between €450bn and €650bn, is cited by Spanish dailies ABC and El Economista, Spanish business news site Finanzas.com,City AM, The Parliament, Deutsche Wirtschafts Nachrichten, Public Service Europe and the Telegraph’s live blog.   Meanwhile, the unemployment rate in Spain reached 24.63% in the second quarter of the year – its highest level since 1994. Separately, El Mundo reports that Catalonia’s Economy Minister, Andreu Mas-Colell, said yesterday that the region “will never accept political conditions” the government may try to attach to the bailout loan Catalonia intends to formally request. Open Europe research Open Europe press release CityAM: Ruparel El País Expansión El Economista El País 2 RTVE El Mundo Economist: Leader Economist Economist 2 Public Service Europe ABC El Economista DWN Finanzas.com Telegraph: Live blog The Parliament Kathimerini reports that Greece’s three coalition leaders have agreed on about €10bn of the €11.5bn cuts Greece is expected to make in 2013-14, with talks due to resume on Monday. Open Europe’s Raoul Ruparel appeared on France 24’s The Debate programme yesterday, discussing the situation in Greece and the future of the eurozone crisis. France 24: The debate FT Irish Times BBC EurActiv EUobserver Les Echos FT Handelsblatt SüddeutscheFAZ Telegraph Kathimerini Welt The OECD has warned that Portugal risks a worse-than-expected contraction this year and next as the eurozone crisis worsens and domestic banks reduce lending. The OECD also expects Portugal's public debt to rise to 114.5% of GDP this year and 120.3% next year, above EU-IMF projections. FT WSJ The Irish government yesterday issued long-term debt for the first time since September 2010, selling €4.2 billion in 5-year bonds at an average yield of 5.90%, while bonds due in 2020 were sold at a yield of 6.10%. Irish Independent Irish Times WSJ WSJ 2 Le Monde reports that the German Credit Federation has demanded that the introduction of the stricter Basel III bank capital requirements, currently being negotiated under the EU’s Capital Requirements Directive IV, be pushed back one year. Le Monde EurActiv reports that according to an opinion poll by French market research group OpinionWay, 52% of French favour a referendum on the fiscal treaty compared with 38% who favour parliamentary ratification, with 10% unsure. In the event of a referendum, 53% said they would vote ‘yes’, 20% said they would vote ‘no’ with the remainder unsure, although the study also found that most of the participants said they were unaware of the details of the treaty. EurActiv Romania will on Sunday vote in a referendum to decide whether to impeach President Traian Basescu, who has already been suspended from office pending the outcome of the vote. The European Commission has expressed concerns about the rule of law in the country, pointing to the power struggle between Prime Minister Victor Ponta and President Basescu. Times Guardian

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