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MPs urge PM to defend City against EU financial services rules; FSA: Many of the regulations that come in are not FSA regulations but European

26 Mar 2012

The FT reports that the Fresh Start group of Conservative MPs, which is drawing up proposals for recasting Britain’s relationship with the EU, will this week publish new ideas in a green paper focused on ensuring the City maintains its global competitive edge and is not hamstrung by EU regulation. Andrea Leadsom MP, a co-leader of the group, said, “Germany always believes it should have the final say over issues relating to the automotive industry; the same with the French and agriculture. We should be in the same position regarding financial services.” Open Europe advised and briefed the Fresh Start group and the All Party Parliamentary Group on EU reform on EU financial services regulation in December last year.

Meanwhile, Reuters reports that EU plans to impose stricter capital rules on pension funds, under Solvency II, could increase pension fund liabilities of the biggest British firms by as much as £2.5bn, accountants Deloitte have said. The Telegraph reports that the Financial Services Authority (FSA) has said it will “take on board” a series of damaging remarks made by the UK insurer Prudential about the regulator, but a spokesman for the FSA said, “Many of the regulations that come in are not FSA regulations but European. The FSA happens to be the body that implements it.”
FT Fresh Start Open Europe research City AM Reuters Telegraph Telegraph 2

Survey shows business thinks Coalition has increased burden of regulation;
Sun on Sunday: The Government needs to do far more to deliver on promises to cut red tape

Citing a survey which shows that business thinks that the Coalition has increased the burden of regulation despite promising to cut it, the Sun on Sunday has launched the “Tear up the red tape campaign”, urging the UK Government to do more to cut red tape. Open Europe’s Vincenzo Scarpetta is quoted saying, “EU red tape still imposes huge and unnecessary costs on UK businesses, in turn hurting jobs and growth. The EU and the UK need to do far more to deliver on promises to cut regulation. We simply can't afford not to.” The paper also quotes Open Europe’s research from 2010 estimating that EU regulation cost the UK economy £124bn since 1998.
Open Europe research Sun on Sunday

Angela Merkel’s CDU triumphs in Saarland regional elections;
Pirate party wins seats in parliament while FDP gets only 1% of the vote

Chancellor Angela Merkel’s CDU party came first in yesterday’s regional elections in Saarland, winning 35.2% of the votes ahead of the SPD on 30.6% and the far-left Die Linke on 16.1%. Merkel’s junior coalition partner at the national level, the FDP, won only 1.2% of votes, a fall of 8% compared with the previous elections. Meanwhile, Germany’s Pirate Party, which has been critical of the eurozone bailouts, came fourth with 7.4%, meaning it has secured seats in Saarland’s regional parliament for the first time. Writing in Die Welt, Torsten Krauel comments that despite expectations of an SPD victory, “The CDU held its own. Angela Merkel will appreciate this when it comes to the formulation of further conceivable eurozone rescue packages”.
FT WSJ BBC EurActiv Bild Welt Welt 2 Welt 3 Welt: Krauel Welt: Crolly Süddeutsche Süddeutsche 2 Süddeutsche: Fried FAZ FAZ: Hefty FTD Handelsblatt

Rajoy’s party fails to secure absolute majority in Andalucía regional elections ahead of crucial week for Spain
Spanish Prime Minister Mariano Rajoy’s Partido Popular won the most votes in yesterday’s regional elections in Andalucía, but failed to secure an absolute majority of seats in the regional assembly. The Socialist party could therefore remain in power if it reaches an agreement with the United Left party, reports El País. The Spanish government had decided to delay the approval of additional austerity measures to avoid the new cuts having an impact on the outcome of the elections. The new measures are expected to be unveiled by the end of this week, with a general strike already planned for next Thursday.   

Meanwhile, Italian Prime Minister Mario Monti spoke of his concern over the situation in Spain, saying, “[Spain] certainly made profound reform of the labour market but it did not pay the same attention to public finances. This is causing us big concern because their yields are rising and it wouldn’t take much to recreate trends that could spread to us through contagion.”
Expansión El País FT WSJ

Germany set to approve combination of eurozone bailout funds
Germany looks set to wave through an increase in the size of the eurozone bailout fund at Friday’s meeting of eurozone finance ministers in Copenhagen. The most likely mechanism is for the EFSF and the ESM, the eurozone’s temporary and permanent bailout funds respectively, to run in parallel until the EFSF expires in 2013. This would give an unused lending capacity of €740bn. The Commission believe that such a move would be enough to convince the IMF to increase its own resources. The FT reports that this would not require parliamentary approval, which makes the option more attractive given the significant opposition in the Bundestag. However, Der Spiegel suggests that since this option increases the German liability it would require Bundestag approval by a two-third majority.

The ECB will allow national central banks discretion over whether to accept bank bonds guaranteed by the bailed out states as collateral for their Eurosystem lending operations, in an attempt to appease German concerns of the excessive risk the Eurosystem has exposed itself to.

The celebrations of Greek Independence Day yesterday were marred by riots and protests in across the country. Kathimerini reports that recent election polls have put New Democracy in the lead on between 18% and 20%, still short of a clear majority. In a feature on Greece leaving the euro, the Sunday Telegraph cited Open Europe’s estimates that the share of Greece’s debt held by taxpayer-backed institutions will go from 36% before the second Greek bailout to 85% in 2015, and that, under a best case scenario, in 2020 Greece “will be where Italy is today.”
FT Bloomberg Telegraph Irish Independent EUobserver Irish Times Kathimerini Kathimerini 2 AFP Kathimerini 3 Kathimerini 4 FT 3 WSJ IHT FT 4 Bloomberg 2 Sunday Telegraph: Osborne Le Monde Le Monde 2 Les Echos Les Echos 2 Les Echos 3 Les Echos 4 Les Echos 5 Les Echos 6 Telegraph: Bootle WSJ: Nixon FT: Munchau Spiegel DMN Spiegel 2 Welt DMN 2 Der Standard El Pais Spiegel 3 Handelsblatt ORF

German Finance Minister Wolfgang Schauble has indicated that the introduction of an EU-wide financial transactions tax is unrealistic, but that he is prepared to consider alternatives such as an extended stock market tax. Meanwhile, EU Taxation Commissioner Algirdas Semeta has rejected a UK-style stamp duty tax as an alternative to the FTT.

Dutch Prime Minister Mark Rutte is seeking consensus support for his latest budget from all eleven Dutch political parties in an attempt to stabilise his coalition government and dampen calls for early elections.
Irish Times

In an interview with BBC Newsnight, German Chancellor Angela Merkel will praise the UK’s role in the EU, saying, “Britain has a lot of common ground with Germany on how we see the future of free global trade…Britain needs to know that we in Germany want a strong Britain in the EU, we always have and we always will…At the end of the day, the British have to decide for themselves to what extent they wish to be part of Europe.”
BBC Newsnight: Merkel

Le Monde: Merkel willing to accept reformulation of ‘fiscal treaty’ if Hollande is elected as new French President
Le Monde reports that German Chancellor Angela Merkel is preparing a “charm offensive” ahead of Francois Hollande’s possible victory in the upcoming French presidential election. According to a high-ranking German government source, Germany could even agree to a reformulation of the ‘fiscal treaty’ on budgetary discipline to appease Hollande’s demands for the introduction of growth-focused clauses, although Merkel’s entourage has so far ruled out this option. 

Meanwhile, Irish Taoiseach Enda Kenny has said that he expects the date of the Irish referendum on the ‘fiscal treaty’ to be announced tomorrow, the Irish Times reports. A poll published by the Sunday Business Post shows that around 49% of respondents would vote in favour of the treaty, with 33% opposed and 18% undecided.  
Le Monde Le Figaro Irish Times FT  Irish Independent

PA reports that an independent Scotland could see checks introduced at its border with England, according to Home Secretary Theresa May. Ms May warned that if an independent Scotland joined the EU, it “almost certainly” would face having to join Europe's border-free Schengen area and therefore it could not be assumed that Scotland would be part of the Common Travel Area.
Open Europe blog

Saturday’s Sun noted that the UK can repatriate 130 EU crime and policing laws in 2014.
Saturday's Sun Open Europe research

Nick Clegg today underlined Britain’s “commitment to fostering stronger trade links” with the world’s fastest growing economies, as he announced that the UK had ratified a Free Trade Agreement between the EU and South Korea during his visit to the country, PA reports.
No link

In an interview with Swedish Radio, European Parliament President Martin Schulz said, “I think that we [MEPs] need one seat. It is not efficient to always be travelling between two locations. I prefer Strasbourg.”
EUobserver DPA

Les Echos reports that the Slovenian government is planning to cut civil servants’ salaries by 15% as part of its effort to cut public deficit to 3% of GDP by the end of 2012.
Les Echos

Drinks companies have threatened legal action over the Prime Minister's plans for minimum pricing on alcohol, claiming that it breaches EU competition law, Saturday’s Mail reported.
Saturday's Mail

In the Independent on Sunday, Patrick Cockburn pointed out that despite the EU-imposed sanctions on Asma al-Assad, wife of Syrian President Bashar al-Assad, as a UK citizen, she is still free to travel to Britain.
Independent on Sunday: Cockburn

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