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EU Tax Commissioner: UK “would lose a lot” if other countries go ahead with FTT; Barnier: The City “must play the European game”

23 Jan 2012

EU Taxation Commissioner Algirdas Semeta told the FT, “The UK would lose a lot if other [EU] members decide to move ahead with a financial transactions tax. Because of its design, [Britain] will be subject to the tax, but at the same time, it will not receive any money from it.” The paper notes that the FTT could use the ‘residence principle’, and therefore cover any trade made by a firm which is based in the tax area, even if the trade takes place in London or other financial centres outside of the EU.  

Meanwhile, after German Economy Minister Phillip Rösler floated the idea of introducing a European ‘bourse tax’ instead of an EU-wide FTT, Open Europe’s Head of Economic Research Raoul Ruparel was quoted in Saturday’s Telegraph saying, “If it is imposed only on shares this bourse tax may not have such a big impact but if it covers, say, derivatives, then it would have a disproportionate effect on the UK because of the size of the City.” Open Europe’s latest report on EU financial regulation is cited by Simon Nixon in the WSJ.

Separately, EU Internal Market Commissioner Michel Barnier is today expected to argue in a speech in the City, “The EU must not hinder the City’s dynamism. But the City must also play the European game. The same applies for the UK government...Opening the door to unanimity for the UK on financial services would mean similar legitimate demands in other sectors from other member states. And that would spell the end of the single market.”
Open Europe research FT FT 2 Saturday’s Telegraph WSJ: Nixon

Croatia has voted to become the 28th EU member state following yesterday’s referendum in which 66% voted for membership and 33% against, albeit on a low turnout of around 44%. Providing all other member states ratify Croatia’s accession treaty, the country will officially join in July 2013.
FT CityAM BBC Guardian IHT Le Figaro EUobserver Il Sole 24 Ore Süddeutsche FAZ European Voice EurActiv Irish Times  

At a rally on Sunday, the Socialist candidate for the French presidential elections, François Hollande, promised to demand that Germany drop its devotion to austerity as the cure to the eurozone crisis, and insisted that – if elected – he will try to renegotiate the new European ‘fiscal treaty’ on budgetary discipline.
Times Le Monde La Tribune Les Echos Welt

Greek bondholders make final offer in voluntary restructuring negotiations;
Monti and Draghi call for euro bailout fund to be doubled in size
Eurozone finance ministers will meet in Brussels today, with the failing negotiations on the voluntary Greek restructuring likely to be top of the agenda. It was hoped that a deal could be struck ahead of the meeting. However, disagreements remain despite bondholders saying that they have made their final offer over the “maximum” level of losses they will accept – thought to be a net present value loss of between 65% and 70%. Der Spiegel reports that even this level of write-downs may not be enough to make Greek debt sustainable. Sources close to the negotiations said they were still hopeful a deal could be struck ahead of the meeting of EU leaders on 30 January.  

Der Spiegel reported over the weekend that Italian Prime Minister Mario Monti and ECB President Mario Draghi have called for the ESM, the eurozone’s permanent bailout fund, to be doubled in size to €1 trillion. German Finance Minister Wolfgang Schäuble dismissed these calls yesterday. The WSJ reports that Monti also said that he has a “very high” expectation that the eurozone will eventually have some form of debt pooling through Eurobonds.

The EU/IMF/ECB Troika overseeing Ireland’s bailout warned the Government that a financial “bomb” would go off in Dublin if it defaulted on payments to bondholders of the former Anglo Irish Bank. Handelsblatt reports that Germany may back Luxembourg’s Yves Mersch to fill the vacant slot on the ECB’s executive board in order to stop the board being dominated by members from southern Europe.
FT CityAM WSJ EUobserver El País Sunday Telegraph  Independent on Sunday Sunday Times Mail on Sunday Telegraph Guardian BBC Le Figaro Il Sole 24 Ore Expansión Spiegel Spiegel 2 Bild WSJ 2 Welt WSJ 3 Spiegel Irish Independent EurActiv European Voice FT 2 WSJ 4 Irish Times Mail on Sunday: Watkins Sunday Telegraph: Halligan Conservative Home: Davis Mail: Wiscarson Times: Lyons FT: Atkins FT: Munchau FT: Dizard Irish Times: Leader Standaard Handelsblatt Kathimerini FAZ Le Figaro: Mills El País: García-Margallo

Following Sunday’s first round of Finnish presidential elections, two pro-euro candidates, Sauli Niinistö and Pekka Haavisto, will run-off in the second round. Niinistö is the favourite – receiving 37% of votes in the first round – while Haavisto polled 19%, beating anti-euro candidate Paavo Väyrynen into third place with 18%.
FT EUobserver 

EU finance ministers will tomorrow try to reach a final agreement on new EU rules on over-the-counter derivatives trading. Divergences remain over the role of the EU’s financial watchdog ESMA, especially when it comes to authorising or rejecting the establishment of clearing houses in a member state, notes EUobserver.
Open Europe research EUobserver 

FT: France and Germany to seek dilution of bank capital rules
The FT reports that France and Germany are to call for a relaxation of the Basel III global bank capital rules – which form part of the fourth review of the EU’s Capital Requirements Directive (CRD IV) – setting them at odds with the UK’s desire to see stronger capital requirements for the banking sector.  

A separate article in the paper notes that the draft directive would treat all loans as if they are in default when they are 90 days in arrears, common practice in much of the EU, rather than the 180 days the UK allows. The change will increase UK banks’ capital charges on its mortgages by 15-20%, forcing many institutions either to cut lending or charge more to customers.  The British Banking Association is reported as saying the 90-day definition was one of their “top concerns” with the draft.
Open Europe Research: Continental Shift Open Europe research: Ten Lessons to be learnt FT FT 2 Le Monde

The Sunday Telegraph reported that David Cameron will this week issue a challenge to the European Court of Human Rights by saying it must no longer be able to act as a court of appeal on cases already dealt with in Britain. Britain is also pushing for changes to the way ECHR judges are appointed.
Mail Sun Sunday Telegraph Sunday Telegraph: Leader Mail on Sunday Conservative Home:Goodman Conservative Home: Rudd  

The FT reports that EU plans to apply Solvency II-type capital requirements to funded defined benefit pensions have attracted strong criticism from the pension industry, particularly in the UK and Netherlands – which between them account for more than 75% of the EU’s funded pension schemes by value of assets.
Open Europe research FT 

FT Deutschland reports that the independent European credit ratings agency conceived by the consulting firm Roland Berger is due to be launched this summer, after 30 institutional investors such as banks, insurance companies and stock exchanges across Europe agreed to provide a €300m endowment.

The BBC reports that EU foreign ministers are today expected to confirm the embargo on Iranian oil agreed by EU member states’ permanent representatives last week.

The European Commission is this week due to unveil plans to introduce a single set of privacy standards in the EU-27. Businesses are concerned that the proposed overhaul could result in costly burdens and big fines for companies that fail to comply with the rules, reports the FT.

In the Sunday Telegraph, Christopher Booker noted that several studies commissioned by EU regulators warned about the potential dangers of how large cruise ships, such as the Costa Concordia, are now designed.
Sunday Telegraph: Booker  


According to sources quoted by the Independent on Sunday, Spain has indicated that it could block an independent Scotland’s accession to the EU, due to fears that such moves may encourage separatist ambitions in Spanish regions, especially Catalonia and the Basque region.
Open Europe research Independent on Sunday Independent on Sunday: Alexander

The Guardian reports that Tony Blair and his aides sanctioned a secret group inside Labour, including the then Europe Minister, Peter Hain, to prepare the ground for a euro referendum during his second term in office, according to Hain’s autobiography.

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