Telegraph
UN warns of 'catastrophic' rise in European youth unemployment if Greece left eurozone
The UN's International Labour Organisation (ILO) has warned of a "catastrophic" rise in unemployment, especially among the young, if debt-wracked Greece were to leave the eurozone or if the bloc were to split.
"It would be a catastrophe for the European youth," Ekkehard Ernst, a senior economist at the body told the German daily Sueddeutsche Zeitung.
Unemployment in crisis-hit Spain would rise to 27.7pc by 2014, the ILO economist calculated, with jobless rates among 15-24 year-olds rising to 51.3pc. Portugal would also suffer a crippling rise in unemployment, AFP reported.
In Germany, Europe's top economy, which is currently enjoying unemployment rates near record lows, close to one-in-10 would be without a job by 2014.
"The average unemployment rate in the 17 eurozone member states would rise to 13pc," Mr Ernst told the paper.
The situation would be even worse if the single currency zone were to break up completely, cautioned the economist.
Again, the young would be worst hit, said Mr Ernst. If the euro were to crash, youth unemployment would rise to 34pc in France, 38pc in Italy and an eye-watering 59pc in Spain.
Telegraph
Eurozone unemployment hits record 18m
Jobless numbers across the 17-nation eurozone hit a record 18m in July, the EU statistics agency said this morning.
An additional 88,000 people joined the ranks of the unemployed throughout July, although upwardly-revised June data meant that the unemployment rate was unchanged at 11.3pc, Eurostat said.
The 18,002,000 headline jobless figure was the highest since records began in 1995, it added.
With an estimated 25.254m unemployed across the full European Union, which also includes non-euro heavyweights Britain and Poland, the figures add to concerns over a plunge back into recession for the eurozone and its nearest neighbours.
At 5.5pc, the unemployment rate was much lower in powerhouse Germany, as well as the neighbouring economies of Austria and the Netherlands, but more than one-in-four are still out of work in Spain, AFP reported.
Annual increases in Spain and Greece were easily the highest, and both countries, labouring under sovereign and banking debt crises, logged jobless rates among the key under-25s age-group of more than 50pc
Bill to approve EU treaty change
Saturday, 1 September, 2012 16:28
The Bill to approve the radical EU treaty change agreed by EU leaders on March 25th 2011 has already been through all its stages in the Lords, and on Monday it will have its second reading in the Commons.
"A Bill to make provision for the purposes of section 3 of the European Union Act 2011 in relation to the European Council decision of 25 March 2011 amending Article 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for Member States whose currency is the euro."
However the Bill makes no provision for a UK referendum on the treaty change.
For those who are sufficiently interested the House of Commons Library has produced a briefing paper on the Bill and the background, which should be accessible through this link:
Alternatively it will come up if "Research Paper 12/47" is put into google.
It says:
"This Bill enables the UK to ratify an amendment to Article 136 of the Treaty on the Functioning of the European Union. The amendment will give legal basis to the creation of a permanent European Stability Mechanism (ESM)."
Because there is no legal basis at all for the present eurozone bailout fund, the EFSF, and moreover it has been structured in a way which is blatantly illegal under the the EU treaties.
For those who have both the interest and the spare time, Monday's debate on the Bill may be viewed here:
However while there may be some kind of discussion between small numbers of MPs, most of them won't be much bothered and if they put in any appearance it will only be to come along at the end and vote as directed by their whips.
When MPs were asked to pre-authorise Cameron to agree to this radical EU treaty change, simply giving Merkel what she wanted to try to Save the Euro and asking for nothing substantive in exchange to protect our national interests, the vote was 310 - 29 in favour of him doing that.
That was the deferred division on March 23rd 2011, which was Budget Day, at Column 1063 here:
My comment at the time was:
"Whether or not they understand this, in effect almost all of the Tory MPs have just voted in favour of the UK being forced to join the euro - not immediately, but eventually."
I still believe that to be case, and I still see no reason whatsoever why we should oblige Angela Merkel on this matter without getting any other EU treaty changes which would be in our long term national interests.
Telegraph
Draghi plan under threat amid EU split
Pressure is mounting on the European Central Bank to water down emergency measures to prop up Spain and Italy, after reports that the chief of Germany’s Bundesbank threatened to quit in protest at the plan.
Pressure is mounting on the European Central Bank to water down emergency measures to prop up Spain and Italy, after divisions within the eurozone were laid bare by reports that the chief of Germany’s Bundesbank threatened to quit in protest at the plan.
ECB president Mario Draghi was expected next week to unveil a new bond-buying programme to help the two struggling eurozone states go on without a formal bail-out. Analysts now expect the measures to fall short of Mr Draghi’s vow to do “whatever it takes” after the German government had to persuade the influential Jens Weidmann to stay in his post.
Mr Draghi appeared to have secured the authority to press ahead with his bond-buying programme after winning the support of the German chancellor, Angela Merkel. With just days to go, he has been confronted with a new problem.
Stepping up the pressure, fellow German ECB policymaker Jörg Asmussen said the ECB should only buy bonds if the International Monetary Fund was involved in setting an economic reform programme in return. Analysts expect Mr Weidmann to be outvoted on the ECB next week, but his threat to quit would put Ms Merkel, the region’s power-broker, in an awkward political position as the Bundesbank is revered in Germany.
Berenberg Bank economist Holger Schmieding said: “Opposition from Weidmann and reservations from some other council members will mean that ECB bond purchases could be highly conditional . . . and not bring yields down quite as much as Italy and Spain might like to see.”
Adding to the sense of uncertainty, ECB officials on Friday night said governors would be presented with a list of options for bond purchases the day before they sit down to deliberate the plan. Economists said the process increased the chances of a decision being pushed back.
The crisis has grown so severe that Mr Draghi this week pulled out of the annual central bankers’ gathering at Jackson Hole in the US to address the problem. Ms Merkel is also reported to have asked the Italian prime minister, Mario Monti, not to request aid until the Bundesbank issue is resolved. Mr Weidmann and the German authorities refused to comment on the reports of his threat on Friday.
Austria’s ECB representative, Ewald Nowotny, lent his support to Mr Draghi by stressing the difference between buying bonds directly from governments and purchasing them on the secondary market to get yields down. “I would warn against making an over-simple or even an ideological discussion about it,” he said.
David Lipton, the IMF’s deputy managing director, also backed Mr Draghi. “He’s got the right idea, the right approach and he needs the conditions under which his action can be effective. He needs the countries of the periphery to be doing what they need to do and then he can act,” he told CNBC.
The dispute took centre stage as Spain’s cabinet approved a major financial reform package to qualify for a €100bn rescue package, including the creation of a “bad bank” to buy troubled property assets .
Deputy prime minister, Soraya Sáenz de Santamaria, said the financial sector reform, Spain’s fifth in three years, was necessary “to have banks lending again”. The “bad bank” will last for between 10 to 15 years and will buy bad loans and foreclosed property from lenders that receive eurozone aid .
Telegraph
Will Spanish depositors kill the euro?
There’s a school of thought out there that Spanish depositors will determine the fate of the euro. The theory is simple: if or when Greece exits the euro, Spanish depositors will panic. Seeing that it’s possible for countries to leave the single currency – previously a no-go – Spanish depositors will rush to empty their accounts. Spanish banks, and therefore the Spanish state, won’t survive the night. Default and a euro exit become inevitable, leading Italian depositors to go through the same drill. The euro will come crashing down.
This line of thought is popular in senior political circles in the UK for example, which partly explains why some senior British politicians call on the ECB, EFSF, ESM – and all other forms of quick money – to "stand behind the euro", in order to keep Greece inside at any cost. But is this analysis right?
This comes down to two questions. First, what are Spanish depositors actually thinking? Secondly, is Greece “unique”?
The answer to the first question is that we have no idea. Since depositors are pretty much everyone – from Senorita Montse to Pepe the Farmer – this comes down to human psychology. When Senorita Montse sees Greece leaving the euro, will she draw the conclusion that she must stuff her mattress full of euros, lest she loses her savings. Does she identify with ‘Grexit’? Chances are that she doesn’t, as viewed from Barcelona or Bilbao, Spain has very little in common with Greece (though a frantic media response may change that). But other types of depositors, such as foreign companies, might respond differently.
This is why the graph below – which the Today programme had a crack at decoding this morning (with some success) – is interesting. It shows the level of private sector (households and corporations) deposits held in Spanish banks. June to July saw an outflow of €74bn or 4.7%. This is a huge amount for a single month. Even Greece has ‘only’ seen a 35% outflow of deposits during the entirety of its crisis – a crisis which has lasted for around 31 months now.
Source: ECB
Since January 2011 Spanish private sector deposits have fallen by around €200bn, a 12pc drop, which is a bit scary. At the same time, though, the overall level of deposits remains solid at over €1.5 trillion. Though hard to tell, the large withdrawal could well be due to foreign investors, rather than domestic depositors, being increasingly spooked by the crisis.
Which raises the second question: is Greece “unique” or just one of the bunch? Here, many EU leaders contradict themselves. The European Commission and German Chancellor Angela Merkel say that Greece is unique, but simultaneously that a Greek exit would be a disaster. Per definition, if it’s unique, then Grexit could be managed. But yet again, this will come down to psychology and perception. There probably is a way to manage a Grexit (see here), that could calm foreign depositors in Spanish banks. It’s not risk free, but neither is continuing on the current paths of ad hoc bailouts and politically complicated austerity packages. Saying that Grexit can’t happen because Spanish depositors may panic is bad Eurozone policy because its too black and white. This is a complicated crisis and there are plenty of ways in which the Greek exit and its fallout can be handled. Better to contemplate and examine then to dismiss them out of hand.
Clearly, these questions are yet to be answered, but what this latest data does highlight is that Spanish deposits could well be a key barometer of the next stage of the eurozone crisis.
Bundesbank chief Jens Weidmann 'considered resigning over ECB bond buying'
Bundesbank chief Jens Weidmann considered resigning several times because of his opposition to a new bond-buying plan by the European Central Bank but was persuaded by the German government to stay, according to reports.
Citing financial sources, Bild newspaper said Mr Weidmann had mentioned his possible resignation to a small circle of people at the very top of the Bundesbank, but the government had urged him to stay.
The Bundesbank was not immediately available for comment, Reuters reported.
Bild said Mr Weidmann had decided against standing down for now and wanted to fight against the planned bond-buying programme at the ECB's September 6 policy meeting.
Sources said he felt he could contribute more this way to stability in the eurozone and to upholding the independence of the ECB.
ECB President Mario Draghi is expected to detail the new bond-buying plan to lower the borrowing costs facing Spain and Italy, after the September 6 meeting.
Earlier, Weidmann had told Der Spiegel magazine that the bond-buying plan verged on the bank's taboo against outright financing of governments.
Juergen Stark, a former ECB chief economist, piled on the German resistance in another newspaper interview on Tuesday, saying the ECB's policy course meant it was being politicised and would ultimately no longer be able to deliver stable prices.
Weidmann's predecessor as Bundesbank chief, Axel Weber, quit last year in protest at the ECB's previous, now dormant bond-buy plan. Stark followed him out of the door.
NOW OUR PAYMENTS TO THE EU HIT £53M EACH DAY
Pressure is on Britain to cut ties with Brussels as EU contributions soar
By Macer Hall
BRITAIN’S payments to the European Union have soared to an eye-watering £53million a day, official figures revealed last night.
A document released by the Office for National Statistics showed that the UK’s annual gross contribution to Brussels coffers reached a record £19.2billion last year.
The massive sum to fund the EU’s bloated bureaucracy and huge array of projects is equivalent to more than £300 a year for every man, woman and child in the country.
Once Britain’s receipts from the EU are taken into account, taxpayers are still contributing a net figure of £30million to Brussels every day.
Last night the figures sparked fresh fury about the spiralling cost of the UK’s EU membership and fuelled support for the Daily Express crusade for Britain to cut ties with Brussels.
UK Independence Party leader Nigel Farage said: “These new figures just show how we are being bled dry by our membership of the EU. We know the costs, so will somebody please show me the benefits?
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These new figures just show how we are being bled dry by our membership of the EU. We know the costs, so will somebody please show me the benefits?
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UK Independence Party leader Nigel Farage
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“Even when you take into account the money that filters back from Brussels we are talking £30million a day leaving these shores.”
The figures were published in the annual “Pink Book” detailing Britain’s annual balance of payments.
They confirm the exact amount of cash handed over to Brussels each year, rather than the estimate published by the Office for BudgetResponsibility at the time of Chancellor George Osborne’s Budget.
Figures showed the UK’s gross contribution to the EU budget rose by £1billion last year compared with the £18.2billion in 2010, a five per cent hike.
And the accounts also showed that Britain received £8.4billion from the EU last year through the annual rebate and from spending within the UK such as farming subsidies and regional development projects.
It means Britain’s annual net contribution to the EU was still £10.8billion, equivalent to £30million a day.
Mr Farage added: “Nineteen billion here, 19 billion there, pretty soon we are talking real money. In our terms this is as much as we spend on the Home Office and Justice combined.
“These figures come from the ‘Pink Book’ which is about as authoritative as you can get, and it makes it clear, year on year we are sending more and more to Brussels.” Tory MP David Nuttall said: “It beggars belief that at a time when we are having to reduce expenditure within the UK the budget of the European Union is increasing and we are having to pay more.”
Jonathan Isaby, political director of the TaxPayers’ Alliance, said: “The Government should be seeking a better deal for taxpayers out of the European Union and be prepared to put it to the people in a referendum.”
David Cameron has already been forced to accept a 2.8 per cent rise in next year’s EU budget, including an extra £350million for UK taxpayers.
A Treasury spokesperson said: “The Government has consistently pressed for restraint in the EU budget and achieved a real-terms freeze in the 2012 budget.”
After Germany, the UK is the second biggest net contributor to Brussels of the 27 EU member states.
Telegraph
Germany at risk of bond yield 'own goal', warns Mario Monti
Germany's insistence on blocking the European Central Bank from acting to bring down countries' borrowing costs could be an “own goal”, Italian Prime Minister Mario Monti has warned.
High bond spreads in some countries have created the potential for inflation in Germany, Mr Monti told Il Sole 24 Ore.
He also insisted that measures by Italy’s government are beginning to soothe market concerns and the country doesn’t need to tap European rescue funds at the moment.
Mr Monti's push for German action comes as he prepares to meet Chancellor Angela Merkel in Berlin on Wednesday for talks on the eurozone crisis.
"The focus of their talks will be, above all, the situation in the eurozone and the economic development in Europe," Ms Merkel's spokesman Steffen Seibert said.
Ms Merkel has embarked on a round of meetings on the eurozone crisis recently following the summer break over heightened fears for Greece but also concern for Italy and Spain, which have faced high borrowing costs on the financial markets.
"The biggest tragedy for Italy and for Europe would be to see the euro become, because of our failures, a break-up factor which awakens the prejudices of the north against the south, and vice-versa," he told an audience of young people in Rimini on the Adriatic coast.
"The risk exists," he said.
It's time to make the whole country a business-friendly "enterprise zone", and pick a fight with the European Commission, argues David Green.
The latest borrowing figures, a severe trade deficit, and falling output in the last few quarters have piled even more pressure on George Osborneto promote growth. But the challenge is not merely to conjure up effective measures for economic regeneration. We need policies that are not only effective but also dramatic, to signal that a corner has been turned.
Some commentators have blamed economic stagnation on the failure of large corporations to invest their huge cash reserves. According to one survey by Deloitte, companies in the UK are holding over £60 billion in excess working capital on their balance sheets.
Some say that companies will not invest until consumer demand picks up. Perhaps so, but the Government is not powerless. It could make a big difference to boardroom calculations by scrapping capital allowances. This may sound a bit technical but it would permit companies to deduct investment in plant and machinery from profits, potentially revolutionising private investment. We know that the Government understands the power of abolishing capital allowances, because many enterprise zones have been granted 100 per cent capital allowances in the first year, a measure which has a similar effect to abolition.
However, tweaking corporation tax rules would meet the test of effectiveness, but lack drama. Boosting economic confidence is not an easy task when market sentiment is as much an emotional state of mind as the result of objective conditions. The change of policy could be combined with a major commitment to declare the whole country an enterprise zone. Currently we have a few enterprise zones - special areas of reduced planning restrictions and increased financial incentives designed to encourage the growth of business - dotted here and there in disadvantaged areas, but very often their main effect is to displace investment from other parts of the UK.
There would be an additional advantage. Making everywhere in the UK an enterprise zone would bring us into confrontation with the European Commission, which will undoubtedly insist that under state-aid rules we would need its permission to go ahead. But we should not allow rival nations to prevent us from renewing the spirit of enterprise in Britain. The European Commission is dominated by our main economic competitors, who will want to prevent us from gaining a new competitive advantage. Instead, we should pick a fight with the European Commission and insist on our right to declare every part of the UK an enterprise zone without their approval – akin to a unilateral declaration of economic independence.
Enterprise zones enjoy simpler planning rules and business-rate discounts. However, instead of a rates discount it would be more in our national interest to use the capital-allowance regime to promote exports. For example, if a company invests in plant and machinery in order to export, it could be granted a 150% capital allowance, permitting it to recover from its profits more than it actually spent, a form of tax relief already used to encourage research and development. A similar incentive could be given to companies in the supply chain of major industries like automobiles. Currently many components are imported and 150% capital allowances could encourage investment in new British capabilities. Companies that have not made enough profit to match the whole cost in the first year of an investment should be allowed to recover their outlay in subsequent tax years.
Abolishing capital allowances could potentially set free billions in company cash reserves. A surge of investment in plant and machinery would set off a rebound effect that could ricochet throughout the whole economy. There would be a cost to the public purse, but it would be smaller than the outlay from a major surge in public sector capital programmes.
David Green is Director of Civitas
Deposit flight from Spanish banks smashes record in July
Spain has suffered the worst haemorrhaging of bank deposits since the launch of the euro, losing funds equal to 7pc of GDP in a single month.
Data from the European Central Bank shows that outflows from Spanish commercial banks reached €74bn (£59bn) in July, twice the previous monthly record. This brings the total deposit loss over the past year to 10.9pc, replicating the pattern seen in Greece as the crisis spread.
It is unclear how much of the deposit loss is capital flight, either to German banks or other safe-haven assets such as London property. The Bank of Spain said the fall is distorted by the July effect of tax payments and by the expiry of securitised funds.
Julian Callow from Barclays Capital said the deposit loss is €65bn even when adjusted for the season: “This is highly significant. Deposit outflows are clearly picking up and the balance sheet of the Spanish banking system is contracting.”
Economy secretary Fernando Jimenez Latorre said Spain is in the eye of the storm right now with the “worst falls” in economic output yet to come in the second half of the year.
Meanwhile, the Spanish statistics office said the economic slump has been deeper than feared, with lower output through 2010 and 2011. The economy slid back into double-dip recession in the third quarter of last year, three months earlier than thought.
“The money that we are asking for is our own Catalan money that is being adminstered by the Spanish government,” said a spokesman, reflecting angry feelings in Barcelona that Madrid is devolving the pain of austerity on to the regions.
Mr Rajoy said he would “listen” but deflected threats of a major showdown if his government seeks to dictate terms. Catalonia is an industrial powerhouse and a net contributor to the central budget. Unlike the Basques, who have weathered the crisis better, the Catalans do not control their own tax revenues. This has become a major bone of contention, reviving bitter feelings that date back to the Franco era.
Separately, Portugal’s tax revenues fell 3.5pc in July despite higher tax rates, raising concerns that the country is tipping into a contraction spiral. It is now certain that Portugal will fail to meet this year’s deficit target of 4.5pc of GDP under its €78bn rescue from the EU-IMF troika. Morgan Stanley said the country will need a “second bail-out” in the autumn.
Mr Callow said shrinking deposits in Spain and other Club Med states are being offset by rises in Germany and the Netherlands, pointing to further “fragmentation” of the eurozone. This will strengthen the hand of ECB chief Mario Draghi as he pushes for mass purchases of Spanish and Italian bonds.
Jorg Asmussen, Germany’s director at the ECB, has signalled support for Mr Draghi once again, saying the authorities cannot allow fears of EMU break-up – or “convertibility” – to destabilise the currency. “Any concerns about treaty-violating state financing will be dispelled,” he said.
The ECB data showed that EMU-wide loans to firms and households continued to contract in July and are down 0.6pc over the past year, implying an acute squeeze in the weakest parts of the eurozone. Jennifer McKeown from Capital Economics said it is clear that the ECB’s €1 trillion blitz of cheap lending to banks over the winter – known as the “LTROs” – has failed to kick-start private lending.
Both Mr Draghi and Mr Asmussen agree that the ECB cannot act alone. It can only offer a flanking operation alongside eurozone bail-out funds (EFSF and ESM), which have the powers to enforce tough conditions.
Nothing can happen until Spain requests a loan package and signs a “memorandum” giving up fiscal sovereignty. It remains unclear whether Mr Rajoy will agree to this.
Mr Draghi has pulled out of the impending Jackson Hole gathering of central bankers, disappointing hopes he would use the event in the US to make the ECB’s plans clearer.
Meanwhile, the Greek government said it is planning to launch Chinese-style “economic zones” with special tax and regulatory breaks in a desperate bid to attract foreign investment.
But the Athens plans could face legal difficulties due to the European Union’s free market rules.
Telegraph
China’s fears grow over eurozone crisis
China has expressed deep alarm at the escalating crisis in Europe and warned against austerity overkill as Europe's crumbling demand sends shock waves through Asia.
Premier Wen Jiabao told German Chancellor Angela Merkel that Europe must "strike a balance" between fiscal tightening and measures to promote growth. "Europe's debt crisis has continued to worsen, giving rise to serious concerns in the international community. Frankly, I am also worried," he said.
His comments mark a shift in Chinese policy. Beijing has until now backed austerity across Euroland, but the severity of China's own downturn has begun to rattle policymakers.
Exports of electronic goods to Italy crashed 43pc in July from a year earlier, and sales to Germany fell 11pc. Caixin reported that processing trade to Europe fell 21pc.
The country's two largest shipping groups COSCO and China Shipping both reported a drastic losses today. The Shanghai composite index of stocks threatened to break below 2000 today, the lowest since the Lehman crisis.
Mr Wen asked for clarification over whether Italy and Spain would adopt "comprehensive rescue measures" needed to unlock the EU bail-out machinery - and open the door to bond purchases by the European Central Bank.
Morgan Stanley said there are signs of incipient capital flight from China. The yuan has fallen almost 1pc since April, and off-shore markets are pricing in further falls over the next year. The risk for Europe is that China could become a net seller of European bonds if forced to run down reserves to shore up the yuan.
Germany has reasons of its own for going easy on Club Med austerity. The policy has finally begun to boomerang, with German exports falling by 14pc to Spain and 8pc to Italy.
David Owen from Jefferies Fixed Income said Germany's IFO business climate index has fallen to levels that normally mean recession. "Germany is not falling off a cliff but the confidence numbers are as bad as the UK. We see a high risk of contraction this quarter and next," he said.
Professor Lars Feld from Freiburg, one of Germany's five "Wise Men", warned today that euro break-up had become a "relatively large risk" and rebuked hard-line German politicians for "populist outbursts" over recent days.
He said an ejection of Greece from EMU would set of a "domino effect" through the EMU periphery, slicing up to 10pc off German GDP. "The markets would promptly ask whether Spain can make it in monetary union."
Prof. Feld said it was great mistake to rely on the ECB to save the day by purchasing bonds. The proper solution is a debt redemption fund that eases the debt burden for struggling states, but only under stringent conditions.
German unemployment has been creeping up for five months. Carsten Brzeski from ING said August job data has been the worst since 1993. "The resilience of the German labour market is cracking up," he said.
The bank said EMU confidence data is back to Great Recession levels. "Sustained fiscal austerity and the "muddling through" approach to the crisis is taking its toll," it said.
The eurozone picture is not entirely bleak. Data collected by Simon Ward at Henderson Global Investors show that a crucial gauge of the M1 money supply - real six-month M1 growth - has been rising for three months. The figures are a leading indicator of industrial output six months ahead, pointing to tentative recovery later this year.
Germany's money supply may soon be expanding too fast for comfort. A Bundesbank study shows that Germany's broad M3 money has grown an 11.4pc rate over the last six months.
German exporters remains super-competitive. The long-term risk is that any policy designed to nurse southern Europe through the crisis will automatically cause Germany to overheat later.
Telegraph
Dutch elections: Crisis of faith in the spiritual home of the euro
The rise of the Dutch Socialist Party could end Holland's reputation as a Brussels-friendly member of the beleaguered Eurozone club, reports Harriet Alexander
Maastricht is a town at the heart of Europe. Tucked in a corner where Holland, Belgium and Germany meet, the smart Roman market town rings with German, French and Dutch voices, and is home to the famous 1992 treaty that created both the European Union and the euro.
But if prominent local politician Jan de Wit has his way, the heart of Maastricht – and of the Netherlands as a whole - will soon be beating a little less fervently for both.
"Maastricht may be a town which in the mind is associated with the EU, but that's only on the surface," said Mr de Wit. "Deep down, people share the same concerns as the rest of the Netherlands.
"Brussels interferes far too much with our own politics. They are telling us that we need is more austerity; that we must cut, cut, cut. But who are they to tell us what to do?"
Mr de Wit's Socialist Party is whipping up a political storm that could have consequences not just for Holland, but for the entire European project that Maastricht gave birth to.
The rise of the Socialists to frontline politics is all the more remarkable given their origins as a 1970s Maoist group with their own "little red book". Indeed, they appear unlikely critics of the EU - the antithesis of the far-Right reactionaries who sometimes dominate the eurosceptic tribe.
Their slogan – a red star inside a tomato – harks back to their origins as a fruit-pelting protest group, while their leader, Emile Roemer, is a former teacher, untested on the national political stage. Yet now their candidates dominate the national airwaves – causing alarm for political leaders across the border in both Belgium and Germany.
German Chancellor Angela Merkel has come to rely on Mark Rutte, the Dutch prime minister and Liberal Party leader, to support her stance on the financial crisis. Both leaders have insisted that tough austerity measures are the only way to get the floundering economies of southern Europe back on track.
Germany and the Netherlands, moreover, are by far the biggest and most influential of the four eurozone countries which retain their coveted AAA credit rating, the other two being Luxembourg and Finland. Any sign that the Netherlands is straying from the doctrine of austerity would not be welcomed by the markets, and will provide further potential headaches for politicians in Brussels.
None of which fazes Mr Roemer, the charismatic leader of the Socialist Party, who has owed he "wouldn't be intimidated by a bunch of people in Brussels."
The 50-year-old, dubbed "Fozzie Bear" by a popular Dutch news blog, is relishing his moment in the spotlight, dominating the coverage of the election with his straight talking and populist rhetoric.
Mr Roemer has promised to tax people earning more than €150,000 at a hefty 65 per cent, and favours stimulating growth over austerity measures. His party has also pledged a referendum on the EU's fiscal compact, the pan-European agreement propsed by Ms Merkel last December that proposes severe fines on countries that fail to keep their deficit down. Mr Roemer said that the Netherlands would pay such a fine "over my dead body".
How can such hostility towards the EU be coming from the Netherlands? The country of 16 million is seen as one of the most staunchly pro-European of all countries, and was a founder member of the six-nation European Coal and Steel Community – a precursor to the EU.
Indeed, when the Maastricht Treaty was signed in the government buildings overlooking the Meuse river, there was nationwide rejoicing, and a huge sense of pride.
Even today, tourists regularly troop into the Limburg Regional Parliament buildings to look at the table upon which the treaty was signed, and gaze upon a replica of the treaty itself, displayed in a glass viewing cabinet beneath black and white photos and original newsreel of the signing.
Maastricht's university, meanwhile, now offers numerous "Brussels-ology" courses such as European Institutional Studies, churning out new generations of Europhile youngsters and potential eurocrat stars of the future. So is the country really turning its back on the EU?
"An awful lot has changed since that treaty was signed 20 years ago," said Harry van Bommel, the Socialist Party's foreign spokesman. "There is a new reality in Europe, and we are all having to come to terms with that."
His views appear to be backed up by Dutch public opinion. A poll at the end of June found that only 58 per cent of voters were in favour of EU membership – a significant drop from the 76 per cent at the time of the last election, in 2010.
Mr van Bommel, a former teacher, says his party's rise is down to two main factors. One is Dutch austerity measures, which he says has increased unemployment and hit the poor hardest. The other is the European Union's attitude to the crisis.
Unemployment may only be 6.5 per cent – low compared to the UK's 8 per cent and Spain's huge 25 per cent – but, for the Dutch people, it is still of great concern.
"No economy of importance has ever come out of a financial crisis through austerity," said Mr van Bommel. "It is simply not going to work. We have seen this in Greece, with devastating social consequences, which will force them out of the euro.
"And the worst thing of all is that unelected eurocrats such as Herman Van Rompuy, president of the European Council, are using the crisis to push towards political union. It's what they have wanted all along, and it's madness."
Mitchell, 38, selling huge wheels of Dutch cheese outside Maastricht town hall, went even further. "I will vote for anyone who takes us out of the euro," he said, slicing into one of the 400 varieties on his stand.
"It is costing us a lot of money – the politicians won't admit it, but it's true. We take care of our own money, and tighten our belts. But now we are throwing it all to Greece and Spain."
The only party calling for a complete withdrawal from the euro and the EU is Geert Wilders' far-Right Freedom Party – the party which withdrew its support for the government coalition earlier this year, caused it to collapse and sparking the forthcoming election.
Like the Socialists, the Freedom Party is popular in the southern areas around Maastricht, where the collapse of the mining industry in the 1970s left a legacy of higher than average unemployment – around eight per cent in Limburg.
Ideologically the parties appear poles apart. Practically, however, a lot of their economic policies are very similar, and much of the Socialists' new support is coming from former Freedom Party voters.
Polls show Mr Roemer's Socialists and Prime Minister Rutte's libertarian VVD Party in a neck-and-neck race to take the most votes, with each forecast to win around 32 seats in the 150-seat parliament. Mr Wilders, meanwhile is a distant third with around 18 seats - six fewer than he took in 2010.
"I am going to vote for Roemer," said Hans, a flower bulb seller who did not want to give his surname. "He just talks a lot of sense."
Many months of tortuous negotiations could now lie ahead as a workable coalition is hammered out. And while no party has ruled out working with the Socialists, Joost van den Akker, the Liberal party leader for the Limburg region, believes most Dutch remain pro-European.
"I think the rise of the Socialists has been exaggerated somewhat," he said, sitting outside a pavement café, as students cycled by.
"Maastricht – and the Netherlands as a whole – is still very pro-Europe. I am confident that the majority of voters, when push comes to shove, will vote for a more open-minded government rather than a reactionary one."
The Maastricht business community certainly hopes so.
“It would be catastrophic for the Netherlands to try and move away from Europe,” said Jan Lamkin, who runs a piping company in the town of Eijsden, near Maastricht.
In many ways his company is typical of the region. The factory is 15 minutes from Germany by car, and 80 per cent of his business is abroad. Of the 50 people he employs, a fifth are German or Belgian.
“Thirty years ago, when doing business in Italy for example, you had to change money to lira all the time – and it was a terrible experience,” he said.
“I know why people like the eurosceptic politicians like Roemer and Wilders. My mother in law says she likes them as she understands what they are saying – and they are on the news all the time.
“But over 80 per cent of Dutch exports go to the EU – and more that half of that to Germany. I am confident Dutch voters won't want to do anything to jeopardise that.”
The rest of Europe will certainly be watching carefully to see if he is right. But if the Socialists do as well as predicted, the "Brussels-ology" students at the University of Maastricht will have plenty to discuss in class.
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"It would be a catastrophe for the European youth," Ekkehard Ernst, a senior economist at the body told the German daily Sueddeutsche Zeitung.Unemployment in crisis-hit Spain would rise to 27.7pc by 2014, the ILO economist calculated, with jobless rates among 15-24 year-olds rising to 51.3pc. Portugal would also suffer a crippling rise in unemployment, AFP reported.In Germany, Europe's top economy, which is currently enjoying unemployment rates near record lows, close to one-in-10 would be without a job by 2014."The average unemployment rate in the 17 eurozone member states would rise to 13pc," Mr Ernst told the paper.The situation would be even worse if the single currency zone were to break up completely, cautioned the economist.Again, the young would be worst hit, said Mr Ernst. If the euro were to crash, youth unemployment would rise to 34pc in France, 38pc in Italy and an eye-watering 59pc in Spain.
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