Daily Press Summary
German Social Democrats call for an EU ‘Marshall Fund’ financed by financial transaction tax; European Scrutiny Committee to criticise Cameron’s stance on ‘fiscal treaty’
Following reports of internal divisions within the German SPD over the ratification of the ‘fiscal treaty’ on budgetary discipline, the party’s leadership troika of Sigmar Gabriel, Peer Steinbrück and Frank-Walter Steinmeier set out a common position on the issue in a joint comment piece for the Sunday edition of FAZ. They argue that combating the eurozone crisis by focusing on austerity had failed, and a new growth-boosting ‘Marshall Fund’ should be set up instead, funded by the proceeds of a financial transactions tax. However, they do not say that the introduction of these measures will be a precondition for their support for ratifying the treaty in the Bundestag, something which had previously been suggested as a possibility.
Separately, Der Spiegel reports that, according to internal sources, German Finance Minister Wolfgang Schäuble is keen on strengthening the fiscal treaty with more thorough monitoring of spending and budgetary discipline by panels of independent experts in member states, the eurozone and the EU as a whole. Meanwhile, in a televised address on Saturday, Irish Taoiseach Enda Kenny launched the government’s campaign for a ‘Yes’ vote in the referendum on the fiscal treaty.
The Sunday Telegraph reported that a forthcoming report from the House of Commons European Scrutiny Committee will criticise David Cameron’s handling of the eurozone debt crisis, calling the fiscal treaty “illegal”. The Sunday Telegraph’s leader argued, “The Committee thinks the EU is guilty of violating its own laws…Does Mr Cameron agree?”
Sunday Telegraph Sunday Telegraph: Leader Express FAZ FAZ: Gabriel, Steinbrück & Steinmeier Spiegel Süddeutsche ORF WSJ Irish Independent Irish Times
Spain unveils €27bn austerity package as part of toughest budget of post-Franco era
On Friday, the Spanish government unveiled a new set of spending cuts and tax hikes worth €27.3bn – the toughest austerity package since the mid-1970s. Spanish ministries will have to cut their budgets, on average, by 16.9% – with the Foreign Affairs Ministry facing cuts of over 54%. Tax on electricity and gas will increase, while some corporate tax exemptions will be scrapped.
Open Europe’s Vincenzo Scarpetta appeared on Al-Jazeera English’s Inside Story discussing the new austerity measures and the future of Spain in the eurozone. Former ECB Chief Economist Jürgen Stark told CNBC that the new European ‘fiscal treaty’ on budgetary discipline “was considered to be the game-changer and I still hope that it will be the game-changer. However, the first test has failed. The first test was Spain.”
Meanwhile, Spanish Prime Minister Mariano Rajoy will today meet the leader of German Chancellor Angela Merkel’s CDU faction in the Bundestag, Volker Kauder, to discuss the details of the package.
El País El País 2 Expansión WSJ El Mundo El Mundo 2 AJE: Inside story Mail on Sunday Saturday's Independent Leader Saturday's Independent Saturday's Guardian Saturday's Telegraph FT Weekend 2 FT Weekend Observer: Garicano FT Editorial FT Weekend: Authers WSJ: Nixon CNBC
Commission accused of adding tough rules for fund managers after agreement between national governments and MEPs
Private equity firms and hedge funds have criticised the European Commission for seeking to add tougher standards to the EU’s Alternative Investment Fund Managers (AIFM) Directive through specialist rules designed to facilitate the implementation of the Directive, after it was agreed by EU member states and MEPs in 2010. The FT reports that, contrary to the advice of the EU’s financial markets supervisor, ESMA, the Commission has proposed tougher restrictions on the amount that fund managers will be allowed to borrow while making it more difficult for fund managers based outside the EU to market their products to investors in the EU.
Open Europe research FT FTfm
Eurozone deal to boost bailout funds gets mixed reception at the IMF
IMF Director Christine Lagarde welcomed the eurozone’s decision to run its two bailout funds in parallel, and said it should encourage attempts to boost the IMF’s lending capacity. However, Canadian Finance Minister Jim Flaherty said, “We think the primary role of the IMF is, and ought to be, supporting the poorer countries of the world, and those countries do not include European countries.” Sky News Economics Editor Ed Conway cites Open Europe’s analysis showing that the actual lending capacity of the eurozone bailout funds remains at €500bn despite Friday’s agreement.
Meanwhile, in the latest Public Issue poll covered by Kathimerini, the Greek Socialist PASOK party has gained 4.5% moving it up to 15.5%, while centre-right New Democracy fell by 2.5%. The two leading parties would gain only 38% of the vote. Separately, NOS Radio reports that the most difficult stage of the Dutch budget negotiations may have passed with a deal possible before Easter.
WSJ EUobserver Sky News blogs: Conway Irish Times Les Echos Irish Times FT Weekend FT Weekend 2 Saturday's Telegraph Saturday's Guardian FT WSJ 2 Handelsblatt FTD FT 2 EUobserver 2 EUobserver 3 Kathimerini Kathimerini 2 Telegraph Independent on Sunday NOS Radio Irish Times FT: Munchau Telegraph: Evans-Pritchard
Open Europe’s event, “Are the eurozone bailouts fair?” with Richard Sulik and Dr. Christian Schulz was covered by BBC News. Open Europe’s panel discussion, “Will the euro survive 2012 and beyond?” is cited by Amparo Polo – London correspondent for Spanish business daily Expansión – on her blog.
Open Europe event Expansión blogs: Polo BBC News
In the Sunday Telegraph, Lord Wolfson noted that the winner of the Wolfson Economics Prize, awarded to the economist who can outline the most plausible way to break up the eurozone, will be announced in June.
Sunday Telegraph: Lord Wolfson
New poll confirms rise of German Pirate Party;
Merkel’s CDU party still on top
An Emnid poll for Bild am Sonntag found Angela Merkel’s CDU party on 36%, followed by the SPD on 27% and the Greens on 13%. Following its success in the Saarland regional elections, the Pirate party increased its share to 9%, while the far-left Die Linke scored 7%. Merkel’s junior coalition partner, the FDP scored 4%, not enough to secure parliamentary representation.
Meanwhile, Open Europe's blog post looking at the future of Angela Merkel's junior coalition partner, the liberal FDP party, is finished following its poor showing in the Saarland regional elections was translated into German and cited by Der Spiegel online.
Spiegel Online Bild am Sonntag
Germany’s ECB Executive Board member calls for eurozone bank resolution fund;
European banks use unorthodox practices to boost capital ratios on paper
The FT Weekend reported that ECB Executive Board member Jörg Asmussen has called for the eurozone to set up a bank resolution fund “accompanied by the establishment of a joint supervisory and resolution regime.”
Meanwhile, the WSJ reports that European banks are engaging in unorthodox practices to delay realising losses on their balance sheet and to improve their capital ratios, for example by moving assets into off-balance-sheet vehicles and sharing some of the risk with private equity firms which then manage these vehicles.
FT Weekend WSJ
Mats Persson: UK could easily postpone implementation of new EU working time rules for years
On his Telegraph blog, Open Europe’s Director Mats Persson looks at junior Business Minister Norman Lamb’s suggestion that the UK should consider resisting a recent ECJ ruling which would automatically allow workers who fall ill when on annual leave to receive extra holiday in lieu. He argues, “In reality, infringement procedures in the EU take years, and can involve lengthy stand-offs between the EU institutions and a member state…The UK could easily postpone the implementation of this law for years.”
Telegraph blog: Persson
EU finance ministers remain divided over FTT
At a weekend meeting of EU finance ministers, Sweden announced support for German Finance Minister Wolfgang Schäuble’s proposal for a two-stage financial transaction tax (FTT), with the first step being a levy on company shares similar to the UK’s stamp duty on shares, but widening it to bonds and derivatives later. However, Luxembourg opposed his plans and Ireland and the Netherlands stated deep reservations, the Times reports. Margrethe Vestager, the Danish Economics Minister chairing the meeting said, “We will do our best to be able to come back to the issue in May or in June, but I don’t foresee that we can reach very hard conclusions.”
Times Huffington Post EUobserver Welt
The FT reports that the European Systemic Risk Board (ESRB), chaired by ECB President Mario Draghi, is due to publish a letter today arguing that EU member states should not be stopped from introducing tougher rules than outlined in the new draft of the EU’s Capital Requirements Directive – marking a victory for the UK.
Le Figaro reports that, if re-elected, Nicolas Sarkozy will announce a total €115bn fiscal adjustment – €75bn of spending cuts and €40bn of tax hikes – to bring France’s public deficit to zero by the end of 2016.
The Sun and Christopher Booker’s column in the Sunday Telegraph have suggested that a European Court of Justice ruling meant George Osborne was under pressure to either charge VAT on all hot takeaway food, including hot products sold at bakeries, or axe the duty completely.
Sunday Telegraph: Booker Economist blogs: Bagehot Sun
Jean-Yves Le Drian, who is tipped to be appointed as the next French Defence Minister if Socialist candidate François Hollande wins the upcoming presidential election, will visit London today in a bid to convince the UK that Hollande’s victory would not jeopardise Anglo-French military cooperation, reports the Guardian.
The Sunday Times reported that EU Foreign Minister Baroness Catherine Ashton has hired Daniel Korski – a foreign policy expert with close links to some Tory politicians – to improve her image and foster better relations with the British Government. Korski’s salary will be around €180,000.
EurActiv reports that new data from the EU’s statistics body Eurostat reveals that many EU countries are falling well short of the EU’s 2020 targets for municipal waste recycling.
The EU’s Citizen Initiative, under which European citizens can directly lobby the European Commission, was officially launched yesterday with Inter-Institutional Relations and Administration Commissioner Maroš Šefcovic quoted by Handelsblatt as saying “I hope that EU citizens will use this right enthusiastically.”
Handelsblatt EC Press Release