Cameron: City “under constant attack” from Brussels; New parliamentary group on EU reform to meet next month
Friday, October 28, 2011
Speaking on his way to Australia, David Cameron said, “London is the centre of financial services in Europe. It’s under constant attack through Brussels directives. It’s an area of concern, it’s a key national interest that we need to defend.” He added, “There are a lot of things the eurozone is doing together. Having more meetings alone, establishing machinery – it raises the question of could there be caucasing? It is very important that the institutions of the 27 are properly looked after and that the Commission does its job as the guardian of the 27.” Meanwhile, London Mayor Boris Johnson has written to the European Commission urging it to drop its plans for a financial transactions tax “at the earliest opportunity.”
The Telegraph notes that the inaugural meeting of a new all-party parliamentary group on European reform will take place on 10 November to discuss the return of EU employment and social laws, with a “draft White Paper on European Reform” due to be published by next July. The Times quotes senior Liberal Democrats saying there may be “wiggle room” for a limited range of European powers to be re-examined. Open Europe’s Director Mats Persson appeared on Sky News‘ Jeff Randall live show yesterday, discussing Britain’s changing role in Europe.
In the Telegraph, Fraser Nelson argues that, “The crunch will likely come sooner than anyone expects. If the eurozone starts to merge tax and spending plans, a two-speed Europe becomes an inevitability…Cameron must now either defend the old order, or negotiate a settlement that the British public will accept. The Prime Minister may not want this battle, but it is one he has no choice but to fight.” On Conservative Home, Andrew Lilico argues that the way to achieve a united Conservative Party “is to repatriate – to repatriate now.” Meanwhile, Chancellor George Osborne told MPs yesterday that he would not allow the IMF to provide money directly to the new euro bail-out fund.
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German Constitutional Court grants temporary injunction against special committee created to oversee EFSF in the Bundestag
FT Deutschland reports that, following a request from MPs Sven Schultz and Peter Danckert of the SPD, the German Constitutional Court in Karlsruhe has granted a temporary injunction against the creation of the Bundestag’s new special committee created to oversee the EFSF, the eurozone’s bailout fund. The basis of their argument was that the special committee, made up of only nine MPs, prevents the participation of all MPs in the parliamentary decision making process. A full ruling on whether the committee can make decisions for the Bundestag on the use and implementation of EFSF funds is expected in the coming weeks.
Markets begin to question the lack of detail in latest EU summit agreement;
China considers investing €100bn in leveraged eurozone bailout fund
Despite responding positively yesterday to the summit agreement struck by eurozone leaders in the early hours of Thursday morning, markets are already beginning to question the lack of detail included in many aspects of the deal. The leveraged EFSF, the eurozone’s bailout fund, has come in for particular criticism, with German Chancellor Angela Merkel admitting that the €1trn touted is an “approximate value” and that eurozone leaders “don’t yet know how [the leveraging] works”. German Bundesbank President Jens Weidmann said of the agreement, “The envisaged leverage instruments are similar to those which were among the origins of the crisis, because they temporarily masked the risks,” according to the WSJ. There are also growing concerns that the actual value of the debt reduction from the Greek write-downs will be far less than suggested by the 50% headline figure.
Reports suggest that China could invest up to €100bn into the leveraged EFSF, although any support would likely come with strong conditions, which could include guarantees against losses and political concessions to China. Hans-Peter Keitel, president of Germany’s BDI industry association warned that “asking a non-eurozone nation to help the euro would give the other nation the power to decide the fate of the single currency…All help from them would come at some political cost.” Meanwhile, the FT reports that European banks may need to raise as little as €20bn in fresh capital on the markets under the bank recapitalisation plan agreed at the latest EU summit. The rest of the €106bn required could be met by retained earnings, debt-to-equity swaps and deleveraging.
In an interview on French TV yesterday, French President Nicolas Sarkozy admitted that accepting Greece into the eurozone had been “a mistake”, because Greece “entered with false [economic] figures. It was not ready.” Sarkozy backed away from recent French criticism of the credit rating agencies saying, “The problem is not the rating agencies. The problem is that we spend too much.” He also noted, “I think that there’s not enough economic integration within the eurozone and there’s too much integration in the EU at 27, which is also going to enlarge.”
In an interview with Chinese press agency Xinhua, Open Europe’s Pieter Cleppe warned that even Germany cannot afford to fund continuous bailouts due to its “high unfunded liabilities.”
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Raoul Ruparel: Latest eurozone deal “isn’t pretty in cold light of day”
In an op-ed in City AM, Open Europe’s Head of Economic Research Raoul Ruparel argues, “Unlike in previous rounds, Wednesday’s meeting between Eurozone leaders saw some real progress. But with the risk of being a killjoy, it still falls far short of what is needed to solve the Greek and eurozone crisis…Many questions remain but the specifics we have aren’t pretty: a continually insolvent Greece, an increasing taxpayer burden, a bondholder bailout and a looming default. Instead of fabricating complicated financial instruments (which they previously lambasted for causing the crisis), eurozone leaders should accept a full hard restructuring in Greece, full recapitalisation of European banks and begin implementation of the necessary reforms to boost growth and competitiveness.”
Writing in the FT, US President Barack Obama states, “The crisis in Europe must be resolved as quickly as possible…Given the scope of the challenge and the threat to the global economy, it is important for all of us that this strategy be implemented successfully – including building a credible firewall that prevents the crisis from spreading, strengthening European banks, charting a sustainable path for Greece and tackling the structural issues at the heart of the current crisis.”
In Italian business daily Il Sole 24 Ore, Roberto Perotti says of plans to leverage the EFSF, “The idea that some financial alchemy can magically multiply €300 billion is a dangerous illusion. The reality is that, for the moment (and waiting for China) there still are only €300 billion to protect Europe from the risk of Italy and Spain’s default.” An editorial in El País calls the plan to recapitalise European banks “financial nonsense” and “a punishment for growth.”
CityAM: Ruparel FT: Obama El País: Editorial Telegraph: Evans-Pritchard FT: El-Erian CityAM: Heath FT Editorial WSJ: Review & Outlook FT: Stephens Les Echos: Gibier Les Echos: Favilla Irish Independent: Malloy FT: Mallet FT: Peel Times: King Times: Lewis Guardian: Jenkins Guardian: Leader Irish Times: Leader Conservative Home: Browne BBC: Peston BBC: Flanders Independent: Wright Independent: Leader Independent: Dejevsky Economist: Leader Economist Economist 2 Il Sole 24 Ore: Perotti
Group of ‘unhappy’ MPs and Senators from Berlusconi’s party urge him to take a step back
A group of MPs and Senators from Silvio Berlusconi’s party have published a letter urging the Italian Prime Minister to step down and leave room for a transitional government, possibly open to centre parties, warning, “The loyalty, sense of discipline and responsibility that we have showed so far…can no longer be taken for granted from now on, in the absence of unequivocal political discontinuity.” Il Corriere della Sera notes that the names and number of the members of the group remain unclear for the moment. However, in a phone interview with Italian TV channel Canale 5 this morning, Berlusconi denied reports of a secret pact with junior coalition partner Lega Nord to hold early elections in March.
Meanwhile, Berlusconi’s plans for economic reform outlined in the letter sent to EU leaders continue to attract widespread criticism. Italy’s trade unions have threatened to call a general strike in protest at the proposal to make dismissals for economic reasons of permanent employees easier, reports Il Sole 24 Ore. In La Repubblica, Deputy Editor Massimo Giannini notes, “Europe is asking for laws. Italy offers pieces of paper. Europe is demanding concrete measures. Italy makes promises. With the latest farce in Brussels, Berlusconi has bought himself a bit of time. But time is now working against him.”
Corriere della Sera Repubblica Repubblica 2 Il Sole 24 Ore 2 Il Sole 24 Ore IHT Straneuropa Repubblica: Giannini Il Sole 24 Ore: Romano Economist: Charlemagne FT Welt Times Guardian
Council of Europe says replacing HRA with a Bill of Rights is “right thing to do”
The Mail reports that Thorbjørn Jagland, the Secretary-General of the Council of Europe, has told Coalition Ministers that he would accept plans to scrap the Human Rights Act and replace it with a Bill of Rights if the idea was to enshrine the convention in UK law. He said, “If [the Bill of Rights] is an alternative to the Human Rights Convention, it will be a problem. But if it is about defining the role of the convention in your own system, it is the right thing to do.” However he warned that if the UK was to turn away from the European Convention, it could harm the promotion of human rights in other states.
European Commission President José Manuel Barroso told MEPs yesterday that EU Economic and Monetary Affairs Commissioner Olli Rehn “will become deputy-head of the [European] Commission for Economic and Monetary Affairs and the euro” and will have “additional working instruments,” reports EUobserver.
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Euobserver reports that EU ministers have rejected the European Parliament’s demands for a 5.23% increase in the 2012 EU budget.
The Guardian reports that EU Fisheries Commissioner Maria Damanaki has told a House of Commons select committee that fish currently discarded under the EU Common Fisheries Policy should be used “for charitable purposes, [though] we will have to give fishermen compensation if they give fish to the poor.” Separately, she told BBC Scotland that one cannot rule out giving Iceland access to Scottish fish as a part of a deal to prevent unsustainable fishing in on-going mackerel negotiations with Norway, Iceland and the Faroe Islands.
FT Deutschland reports the EU Commission has given Germany and Romania two months to implement the Data Retention Directive. The countries’ constitutional courts have previously annulled the respective national laws that transposed the directive on data protection grounds.
This post originally appeared on Open Europe.