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New on the Open Europe Blog The eurozone's new quick fix risks papering over much deeper cracks Open Europe Blog The UK and banking union: Could the Coalition go for a 'single market lock'? Open Europe Blog Showdowns that will define Europe's future Open Europe Blog

Daily Press Summary ECB denies plans to limit differences in eurozone borrowing costs; Bundesbank issues stark warning against further ECB intervention In response to a report by Der Spiegel over the weekend, which suggested the ECB was considering implementing a cap on the spread in borrowing costs between eurozone countries, the ECB issued a strong denial yesterday saying, it is “absolutely misleading to report on decisions which have not yet been taken and also on individual views, which have not yet been discussed by the ECB’s governing council.” However, the Telegraph reports that, according to EU diplomats, committees within the national central banks and the ECB are working on laying out the pros and cons to various intervention options, which will be considered by the ECB Governing Council. The Bundesbank has also signalled its opposition, saying that “decisions on a potentially much more comprehensive pooling of solvency risks” should be taken by governments not central banks. TheTelegraph reports that German ECB Council Member Jörg Asmussen has taken a different line, issuing support for Draghi’s plans for more intervention, potentially putting him at odds with the Bundesbank. Open Europe’s Raoul Ruparel is quoted by the Telegraph discussing the issue. FT CityAM WSJ WSJ Heard on the Street IHT EUobserver Telegraph Euractiv Irish IndependentRepubblica La Stampa Sole 24 Ore FT 2 Raoul Ruparel: The Eurozone’s new quick fix risks papering over much deeper cracks Writing in City AM, Open Europe’s Raoul Ruparel argues, “The spreads in borrowing costs are a symptom of the crisis rather than a cause, although they have admittedly made things more difficult. However, artificially forcing them together will only paper over deeper problems. The best such a move can do is to buy time. With the ECB already having bought Eurozone leaders two years, which were promptly wasted, we must ask whether this latest proposition is worthwhile. There is, as of yet, no definitive answer. But the first move must be at the intergovernmental level. Until progress is made there, any move by the ECB would simply jeopardise its fundamental mandate, putting more money at risk and dragging the crisis on further, all without any clear end in sight. The ball is firmly in Eurozone leaders’ court and should stay there.” Writing in FAZ, Holger Steltzner, one of the paper’s editors-in-chief, condemns the proposals, arguing, “In this kind of central banking planned economy…the goal is clear: creditors should bleed in order to help debtors.” CityAM: Ruparel FAZ: Steltzner Kathimerini: Greece finalises package of €13.5bn cuts; Finnish FM: Greek default “looks likely” without further aid or changes to bailout programme Greek daily Kathimerini reports that the Greek government is readying a package of €13.5bn cuts – higher than the €11.5bn demanded by the EU-IMF-ECB Troika – as the Greek finance ministry has calculated that, once the pension and salary cuts are implemented along with public spending reductions, tax revenues and social security contributions will fall by around €2bn, creating a new shortfall. Greek Prime Minister Antonis Samaras will present the new austerity measures to German Chancellor Angela Merkel and French President François Hollande in bilateral meetings later this week. Eurogroup Chief Jean-Claude Juncker will travel to Athens tomorrow. Meanwhile, Finnish Foreign Minister Erkki Tuomioja said of a Greek default yesterday, “We certainly do not hope this will happen, but without further support or changes to its programme it looks likely.” Michael Fuchs, the deputy parliamentary leader of Merkel’s CDU party, told BBC Radio 4’s World at One programme, “We have decided – the CDU-CSU faction in the Bundestag – that there would be no more expansion [of the Greek adjustment programme] at all. We think that it’s enough time and it’s very difficult for us to explain to our constituencies in light of next year’s elections why we are giving them more time.” However, the CDU’s budget expert Norbert Barthle told the Passauer Neuer Presse in an interview that minor changes to the Greek bailout programme are “possible”, and mentioned lower interest rates as an example. Der Spiegel reports that eurozone governments are considering alternative solutions to avoid giving Greece a third bailout in the event it needs extra funding – including the reduction, or even the complete elimination, of the interest Greece pays for its bailout loans. Sun Mail Irish Times CityAM WSJ European Voice Euractiv EUobserver Kathimerini Il Sole 24 OreRepubblica BBC Les Echos La Tribune Spiegel A new study by the Foundation for Applied Economic Studies (FEDEA) predicts that Spanish regions will miss their deficit target of 1.5% of GDP for this year by at least 0.4%, reportsExpansión. Meanwhile, Spain sold €4.5bn of twelve and 18-month Treasury bills this morning, at lower interest rates than in the previous auction. Separately, Reuters suggests that the size of Emergency Liquidity Assistance (ELA) provided to Spanish banks increased from only €2m in June to €402m in July. Open Europe research Telegraph El País El Mundo Expansión El Mundo 2 Expansión 2 FT: El-ErianReuters Jornal de Negócios reports that the Portuguese government is to provide a €135m bailout to the Azores, due to the region’s difficulties in refinancing its debt. Jornal de Negócios WSJ German Economy Minister Philipp Roesler has said that the EU should avoid actions aimed at boosting carbon prices, following a proposal last month by the European Commission to allow it to delay some auctions of carbon permits and boost the carbon price within the EU’s emissions trading scheme. Bloomberg Writing in the Evening Standard, Lord Owen argued, “The UK should put no obstacles in the way of integration within the EU provided those who want that greater integration facilitate the separation out of a European Community for all EU member states based on the Single Market.” Evening Standard: Owen In the Telegraph, Philip Johnston looks at what the Julian Assange case reveals about the EU’s European Arrest Warrant. Telegraph FT: Raab The European Commission is pressuring German authorities to implement the ban on incandescent light bulbs more strictly, reports Der Spiegel, as salesman are trying to circumvent the ban by selling bulbs originally meant for specialised industrial purposes. Spiegel