Photo: David Goehring on Flickr
New Open Europe briefing: At current borrowing costs, Italy could face an extra €28bn in interest payments over the next three yearsTuesday, November 08, 2011
In a briefing note published this morning, Open Europe estimate that, at current borrowing costs, Italy could face an extra €28bn in interest payments over the next three years, potentially wiping out almost half of the projected €60bn budget savings by 2014. Open Europe argues that, as things stand, the best way forward for Italy would be some sort of government of national unity led by a cross-party figure. Open Europe’s Vincenzo Scarpetta is quoted on the Telegraph‘s live blog and in the Irish Independent arguing, “[Italian Prime Minister Silvio] Berlusconi now simply has to step aside – while the situation can still be saved – and be replaced by a national unity government with broad support in the Italian parliament.” Vincenzo also appeared on American Public Radio yesterday, discussing Italy’s current political situation, while Open Europe’s estimates were cited by the Mail.
The interest rate on Italy’s 10 year bonds reached 6.74% this morning as Berlusconi yesterday denied rumours that he was close to resigning and insisted that he would put the economic reforms pledged to EU leaders to a vote of confidence in the Italian parliament, in order to “look in the face those who are trying to betray me.” However, the leader of junior coalition party Lega Nord, Umberto Bossi, has this morning said that his party has asked Berlusconi to step down and hand power to Angelino Alfano, the Secretary-General of Berlusconi’s party. Meanwhile, the lower house of the Italian parliament will today vote on the 2010 budget review. The review is expected to pass, since opposition MPs are likely to abstain, but today’s vote could confirm that Berlusconi no longer holds a majority in the chamber. La Repubblica notes that Italian Economy Minister Giulio Tremonti will miss part of today’s meeting of EU finance ministers in order to vote on the review.
Open Europe briefing Open Europe press release Repubblica La Stampa La Stampa 2 Corriere della Sera Telegraph: live blog Mail FT 2 FT 3 WSJ 2 WSJ 3 WSJ 4 FT CityAM WSJ Irish Times European Voice Telegraph Guardian Times Independent IHT Irish Independent
Greece expected to announce new Prime Minister today despite disagreements;
EFSF struggles to issue bonds due to uncertainty over future size
Greece is expected to announce the leader of its national unity government today with former President of the Greek Central Bank Lucas Papademos still the main contender, despite talks dragging on last night due to disagreements over the extent of his remit, and the duration of his government. In spite of the delay, a final decision is expected ahead of today’s meeting of EU finance ministers, who have stated that they will only agree to release the next tranche of Greek bailout funds when the unity government is confirmed.
The eurozone finance ministers resumed their discussion on how to leverage the EFSF, the eurozone’s bailout fund, yesterday with the focus on detailing the plans to insure some sovereign debt and to set up a separate fund to attract external investors. EFSF head Klaus Regling said they expect to have at least one option operational by December. The EFSF issued €3bn in bonds yesterday, although demand was weak most likely due to uncertainty over the future of the fund.
The Times notes that the emergence of the “Groupe de Francfort”, an informal new grouping that comprises the leaders of Germany and France, the presidents of the European Commission and of the European Council, the heads of the ECB and the IMF, the chairman of eurozone finance ministers, and the EU Commissioner for economic and financial affairs, is being viewed with suspicion by countries outside the euro and smaller eurozone countries, such as Finland and the Netherlands.
Meanwhile, the ECB increased its bond buying programme last week, purchasing €9.5bn in debt. The Guardian reports that calls for the ECB to step in and financially backstop the eurozone are growing, with Prime Minister David Cameron saying in the Commons yesterday that he cannot understand “why some in Europe are so opposed to the ECB being more of a monetary activist”.
Open Europe’s Raoul Ruparel appeared on Sky News and RTE Drivetime discussing the eurozone crisis. Raoul is also quoted by Bloomberg and the National Post. Open Europe’s breakdown of who holds Greek debt is cited by Bloomberg.
IHT Le Figaro WSJ Irish Times EurActiv Telegraph WSJ 2 Irish Times 2 Irish Times 3 European Voice FAZ Welt Times FAZ 2 FAZ 3 Telegraph 2 Times 2 Irish Independent FT CityAM WSJ 3 Irish Times 4 Guardian Guardian CityAM 2 Telegraph FT 2
In the Telegraph, Philip Johnston cites Open Europe’s estimate that EU Social and Employment policies cost the UK £8.6bn every year, and that halving their cost could result in a boost to economic output equivalent to the creation of 140,000 new jobs.
House of Commons to debate long-term EU budget
The House of Commons will today debate the EU budget for 2014 – 2020.The European Commission has called for a 5.9% increase in 2014-2020, but the BBC reports that the Treasury has estimated this amounts to an 11% increase on current contributions, increasing the UK’s annual contribution to the EU by £1.4 billion. The Commons will also debate a Treasury proposal to object to the EU’s proposals on capital requirements for credit institutions and investment firms, as it proposes maximum limits and wouldn’t allow the Government to impose additional requirements on UK banks. In a rare move the Government proposes using the ‘orange card’ procedure on subsidiarity.
Government Motion BBC CityAM
French Government announces new austerity drive;
French PM: “Bankruptcy is not an abstract word”
French Prime Minister Francois Fillon announced a comprehensive austerity package yesterday in a bid to preserve France’s AAA credit rating, arguing that: “We wish to protect the French against the grave problems facing other European countries. Bankruptcy is not an abstract word”…The package, the second since August, includes plans to cut state spending by around €65bn by 2016; €18.6bn of which is to be achieved by 2013.
Telegraph Irish Independent IHT Le Figaro Les Echos: Gibier Les Echos Welt FAZ FAZ 2 Süddeutsche
Eurozone Comment Roundup
In the FT, Gideon Rachman argues that, “Some argue the destruction of the single currency will destroy the EU itself. But such alarmism risks becoming a self-fulfilling prophecy. Key European achievements such as the single market, border-free travel and co-operation on foreign policy preceded the single currency and they can survive its demise. Rather than insisting that the break-up of the euro is unthinkable, Europe’s leaders need to start planning for it.”
In the Guardian, Lord Owen argues that Croatia’s accession to the EU, expected in mid-2012, should be used to amend the EU Treaties to establish a non-eurogroup: “The EU must, first and foremost, end the pretence and establish that all 27 members are free to enter or leave the eurozone while staying in the EU”.
Guardian: Owen Guardian: Leader Independent: Lawson Irish Independent: Molloy Mail: Heffer Mail: McCay FT: Rachman FT: Glenny FT: Stephens WSJ: Hannon WSJ Review & Outlook WSJ: Mingardi Irish Times: Beesley Irish Times: O’Brien Süddeutsche: Hoffmann
In an interview with FAZ, Danish Foreign Minister Villy Søvndal argues that: “We want a Denmark, which is part of Europe. The chapter of the nationalist Danish with this election is definitely over”. When asked what closer eurozone integration meant for Denmark, a non-eurozone member, he argued “We do not want a EU10 of the others…the real line of conflict is not about the 17, it’s about the two [France and Germany]… as a small country it is important to us that there is a collaboration of 27 member states… there cannot be a core”.
On Conservative Home, Martin Callanan MEP writes that Czech ODS politicians have questioned whether their country should keep its commitment to join the Euro after Prime Minister Petre Necas said that his country agreed to join a currency union, not a debt union.
Conservative Home: Callanan
The Ideas on Europe blog reports that the European Council has made use of an article in the Lisbon Treaty which allows it to request any studies considered “desirable for the attainment of the common objectives” to urge the European Commission to make a new proposal for the pay of EU officials that better reflects “the economic and social situation in autumn 2011”.
Ideas on Europe blog
EurActiv reports a study by the European Climate Foundation that concludes that the EU will need to double its energy grid investment in the decade after 2020 to €1.2 trillion if it is to meet the European Commissions’ plan in its 2050 roadmap for virtually emissions free electricity.
The German government is opposed to new Commission plans for a tax on diesel and other energy sources, FTD has learned. A confidential document reads that at the moment it is “impossible to reach a compromise on the issue”.
European Voice reports that the addition of 18 new MEPs to the European Parliament could happen as early as next month after Belgium, the last member state to approve the change, moved closer to giving its formal approval.
The Telegraph reports that Britain’s second biggest house builder Taylor Wimpey has said that the Eurozone crisis “could wipe 10% off house prices”, citing the potential for a withdrawal of bank finance in the UK.
This post orginally appeared on Open Europe.