2014 could see non eurozone countries in permanent minority under changes to EU voting rules; Forthcoming Open Europe research: EU social policy costs the UK 8.6 bn pounds a year
The FT, Telegraph and Sun report on findings from a forthcoming Open Europe report which estimates that complying with EU social policy, such as the Working Time Directive, costs UK businesses and the public sector £8.6bn a year, and that halving the cost of these regulations could provide a boost in economic output equivalent to the creation of between 60,000 and 140,000 jobs. The findings were also cited on the BBC Radio 4’s Today Programme this morning. Open Europe’s director Mats Persson argues in the Telegraph that: “While the single market is important for British business, the one-size-fits-all nature of EU social law often results in cumbersome and unnecessarily costly regulation…Deciding social and employment matters nationally would be far more responsive to the needs of the British economy and the pursuit of jobs and growth”, adding that the costs and benefits of EU social laws would not disappear, but that they would be brought under the control of MPs at Westminster.
Meanwhile, the Sunday Telegraph reported on another of the report’s key findings, which shows that under changes already agreed in the Lisbon Treaty, the EU’s eurozone states will have a permanent in-built majority in the EU’s main decision-making body – the Council of Ministers – from November 2014 (or 2017 if a member state requests it). If the eurozone block votes unanimously as a “caucus”, Britain and the other non-eurozone members would not be able to block a proposal they may disagree with. An editorial in the paper argued, “There can be a workable compromise between being subsumed by the EU and divorcing ourselves from it entirely. The Government has said the same. But for that to come about, we need a detailed examination by ministers about what our options and goals are, and a wide-ranging debate among the public.” The Express also reported on Open Europe’s findings.
Separately, the Mail on Sunday reported that cabinet ministers Iain Duncan Smith and Owen Paterson are due to meet Prime Minister David Cameron today, and are expected to push him to take a clearer lead on Europe following his decision to order Conservative MPs to vote against an EU referendum.
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Pressure mounts on Berlusconi to resign as Italy’s borrowing costs near unsustainable levels; Italian Interior Minister: If there’s no majority, there’s no use insisting
The interest rate on Italy’s 10-year bonds reached 6.68% this morning, drawing ever closer to the 7% threshold which proved unsustainable for Greece, Portugal and Ireland. Italian Prime Minister Silvio Berlusconi is facing increasing pressure to step down, with article in La Repubblica suggesting that he may resign tonight, ahead of tomorrow’s politically significant vote on the 2010 budget review, after even the Secretary-General of his party, Angelino Alfano, urged him to step down. Yesterday another MP from Berlusconi’s party defected to the Christian Democrats’ group in the lower house of the Italian parliament, where Berlusconi has already lost the arithmetical majority, while Italy’s main opposition party has threatened to present a no-confidence motion this week if Berlusconi refuses to resign voluntarily.
Speaking on Italy’s public broadcaster Rai Tre yesterday, Italian Interior Minister Roberto Maroni – a prominent member of junior coalition partner Lega Nord – said, “The latest news makes me think that the government doesn’t have a majority anymore [in the lower house of the Italian parliament]. If there’s no majority, then there’s no use insisting.” Both IMF Chief Christine Lagarde and French Foreign Minister Alain Juppé stressed over the weekend that the Italian government and its plans for economic reform have a problem of credibility, while Luxembourg’s Central Bank Governor Yves Mersch warned in an interview with La Stampa on Sunday that the ECB could stop buying Italian bonds “at any time.”
After its growth forecasts were revised downwards, the French government is today expected to endorse a new set of austerity measures worth around €8bn in 2012, including speeding up retirement age increase from 60 to 62. Open Europe’s Raoul Ruparel appeared on Sky News, BBC Radio Wales and BBC World Service discussing the crisis in Greece and Italy. Open Europe’s Pieter Cleppe appeared on BBC World Service discussing the eurozone crisis as well.
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Greek PM agrees to step down as politicians agree on unity government in Greece;
G20 summit plan to increase EFSF blocked by Bundesbank
Greek Prime Minister George Papandreou agreed to step down last night, to pave the way for a coalition government, despite winning a confidence vote on Friday night. The coalition government will implement the latest bailout package and the accompanying austerity measures. Once this task is completed, elections will be held, possibly in February 2012. It is not yet clear who will lead this coalition, with Lucas Papademos, former Head of the Greek Central Bank, and Greek Finance Minister Evangelos Venizelos seen as the front runners. A final decision on the new Prime Minister is expected today, since Venizelos is heading to a meeting of eurozone finance ministers who are expecting detailed updates. It is hoped that the new government will be in place by the end of the week.
Meanwhile, the latest G20 summit concluded on Friday with little progress made on establishing a credible firewall around struggling eurozone countries or increasing the financial backstops available to them in the eurozone. After the summit Prime Minister David Cameron said, “I’m not going to pretend that all the problems in the eurozone have been fixed…They haven’t. The task for the eurozone is the same as it was coming into the summit.”
The German press reports that any deal to increase the funding available to the eurozone countries, through the IMF, was vetoed by the Bundesbank who feared the losing their independence. One plan, which was instantly rejected by the German government, involved Germany selling €15bn of its €132bn in gold reserves. Another more detailed proposal involved using the foreign exchange reserves of eurozone countries, in the form of IMF special drawing rights, to provide capital for the eurozone’s bailout fund.
Meanwhile, according to new research by Centre for Economics and Business Research (CEBR), the break-up of the eurozone could have less of an impact on the UK than feared. CEBR suggests that the initial pain could give way to greater stability in the medium and long-term, arguing that preserving the Eurozone will lead to 10 years of austerity, harming UK growth, whereas the UK would be on at least a level playing field after five years in the event of a break-up.
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Barnier: Suggestions that I’m trying to undermine the City are “nonsense”
EU Internal Market Commissioner Michel Barnier said in a speech in London, “I am fully aware of the criticisms I face. ‘You’re undermining the City of London’s competitiveness.’ ‘You’re trying to promote Paris and Frankfurt over London.’ All this is nonsense.” Separately, the FT reports that credit rating agencies have complained about proposed EU measures to allow for the temporary suspension of their rating of sovereign bonds, as they would “disrupt access to capital markets”. Barnier’s spokesman responded saying that this “smacks of desperation.”
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Le Point reports that, according to a poll conducted by IFOP, almost one third of French (32%) would be in favour of a return to the franc.
The Telegraph reports that the UK will sue the EU in order to prevent costly reciprocal benefits deals with Ukraine and North African countries that it believes will encourage“benefit tourism.” In an interview with the paper, Employment Minister Chris Grayling describes the deals as an EU “land grab”, adding that “pre-emptive action to stop this” was now necessary.
A poll of 18,000 Spanish voters published by the Centre for Sociological Investigation shows that Spain’s opposition Partido Popular is set for a historical victory at the upcoming general elections scheduled for 20 November. The PP is credited with 190-195 seats in the lower house of the Spanish parliament, while the governing Socialist party would stop at 116-121 seats, reports El País.
The Irish Independent reports that the Irish government is still planning to appoint Kevin Cardiff, the Head of the Department of Finance, as the Irish member of the European Court of Auditors, despite the recent €3.6bn accounting error resulting in Ireland’s national debt being overstated.
On the day the UK takes over the rotating chairmanship of the Council of Europe, Shadow Justice Secretary Sadiq Khan writes in the Telegraph, “Since the UK will not chair the Council of Europe again until 2035, we will put party politics aside and work in the national interest to bring about a more efficient and effective [European] human rights court. Labour will support the Government in its endeavours…But we will not sanction watering down the protection that the convention provides to the people of this country and beyond.”
The UK’s contribution to the IMF could be increased up to £40bn without needing a parliamentary vote, according to Chief Secretary to the Treasury Danny Alexander. Despite an increase in IMF funds being discussed at last week’s G20 summit no deal was reached, although one is expected to be agreed at the next summit or by February next year.
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