Daily Press Summary
Sarkozy: ECB should discuss euro’s exchange rate with governments; La Tribune: The Merkozy couple “has committed suicide”
Nicolas Sarkozy argued this morning on RMC Radio that the euro’s exchange rate to the US dollar should be subject to discussion between the ECB and eurozone governments in order to help European exports. He said, “If the euro rises too much, our exporters can’t sell anymore. They lose money because they’re not competitive, but also because the value of the euro is too high. This is a discussion that we need to have with the President of the ECB.”
A leader in La Tribune argues that the “Merkozy” couple committed suicide on Sunday, after Sarkozy suggested revising the role of the ECB. “In calling for a revision of the role of the ECB… Sarkozy has declared war on Germany for domestic political reasons”, the article notes.
Meanwhile, Socialist Presidential candidate Francois Hollande explained on France Inter this morning that he would not base his economic programme on IMF projections, which forecast weaker than expected French growth for 2013. “The IMF calls for austerity measures, which would worsen our growth prospects and would not help France balance her accounts”, he opined. In the latest poll released this morning, Hollande leads Sarkozy in the first and second round polls, by 5% and 16% respectively.
In an interview with Handelsblatt, Hollande announced that “if the fiscal compact does not contain growth measures, I will not be able to support its ratification by the National Assembly. I promised France and I will stick to my promise”. He dismissed the compact’s golden rule restriction on public debt as “a simple public relations operation”.
RMC: Sarkozy Le Monde Mail BBC Telegraph Telegraph Reuters BBC 2 La Tribune La Tribune leader Les Echos Irish Times Le Monde Le Monde 2 Handelsblatt 1 Handelsblatt 2 Le Monde 3 La Tribune leader La Tribune
“Perceived” inflation in Germany at 3.7%;
EU officials working on contingency plans to provide external financing to Spain
The FT reports that despite denying the need for a Spanish bailout, European officials are preparing contingency plans for providing external financing to Spain, with the most likely form being low cost loans from the eurozone bailout funds to help recapitalise Spanish banks. Increased purchases of Spanish bonds by the ECB and easing deficit targets are also being considered but face significant opposition from some eurozone leaders. Spain successfully sold €3.2bn in short term debt yesterday, above its target of €3bn on the back of strong demand. Despite borrowing costs rising markets reacted positively to the sale.
Reuters reports that according a leaked draft version of a Commission document on Greece to be published today, Greece faces numerous hurdles and reforms if it is to return to growth and meet the targets of its bailout programme. The report expects the country’s deficit to be 7.2% of GDP this year, above the 6.7% seen in the government’s supplementary budget, reports Kathimerini.
Separately, in its World Economic Outlook published yesterday, the IMF warned that global economic growth is “fragile” and that “austerity alone cannot treat the economic malaise in the advanced economies.” IMF Chief Economist Olivier Blanchard called on European banks to be recapitalised using the eurozone bailout funds, adding that such a move could “pay for itself” due to increases in “credit and activity”.
Meanwhile, Die Welt reports that according to Unicredit bank, perceived inflation in Germany stands at 3.7%, almost double the official 2.1% figure.
On his Telegraph blog, Open Europe’s Mats Persson argues, “Economically, ECB-induced inflation would not present a long-term solution to the eurozone’s ills by any means. Although the initial effect would be make adjustment in the struggling countries easier, the eurozone would remain split into at least two parts running at very different speeds. What happens after the initial boost in demand, as the transfer is, per definition, time limited? Would the ECB then continue to spray money on the Continent to keep the party going?
Telegraph blogs: Persson FT Reuters FT 2 CityAM BBC Guardian Mail Irish Independent Les Echos CityAM 2 WSJ FT 3 FT 4 WSJ 2 Irish Times Les Echos Le Monde Les Echos Times Times WSJ 3 WSJ 4 Irish Independent La Stampa Telegraph Reuters FT 5 El País 2 Reuters 2 WSJ 5 Kathimerini Le Figaro Kathimerini 2 EurActiv Kathimerini 3 FT 6 FT Letters: Dumas FT: Wolf WSJ: Verhofstadt Express Express Express: Forsyth IHT: Saft FT: Coelho Welt Welt: Kaiser Welt Bild WSJ
On his Telegraph blog, Conservative MEP Daniel Hannan writes: “Could there…be a Conservative-UKIP alliance while the Tories remain in favour of EU membership? Yes. Full independence is unlikely to be party policy; but an In/Out referendum might well be. And such a referendum ought to be enough.”
Express Telegraph: Hannan BBC: Newsnight Conservative Home: Goodman
FAZ reports that Münich-based lawyer Bernd Schünemann and the Foundation of Family Entrepreneurs are suing the Bundesbank for “breach of trust” over its handling of the Target 2 balances within the ECB.
Giving its opinion on the upcoming new multi-annual financial framework, the European Court of Auditors has criticised EU rules on agricultural subsidies as too complex, too bureaucratic, too ambiguous and too oriented on spending, reports Euractiv.
Open Europe Research: CAP Reform Euractiv.de ECA Press Release European Voice
Denmark, Norway and Sweden confirmed yesterday that they will provide a combined extra $26bn to the IMF, while Australia has said it is ready to commit additional funds but did not specify the amount. Washington spokesperson Lael Brainard said yesterday that the US believes the IMF funds to be “totally adequate”, and would not increase its contribution.
€1.49bn surplus left over from 2011 EU budget
EU Budgetary Commissioner Janusz Lewandowski announced on Monday that there was a €1.49bn surplus left over from last year’s EU budget, which will be credited against member states’ planned contributions for next year’s budget. Lewandowski is quoted as saying that: "Of course, one could find it contradictory that the 2011 budget shows a small surplus when we announced that we could not pay €11bn worth of bills that arrived last December… This is mainly due to two reasons: on the one hand it is immensely difficult to shift funds from one part of the EU budget to another; on the other budgetary procedures are very slow and late sources of income cannot always be processed by the end of the budgetary year.”
Barroso “very disappointed” by Argentina’s oil move
European Commission President José Manuel Barroso yesterday criticised Argentina’s decision to re-nationalise oil company YPF, of which Spanish firm Repsol is the majority shareholder, saying he was “very disappointed” by the move. However, Spanish business daily, Cinco Días, reports that the Commission has ruled out taking retaliatory measures at the EU level. Open Europe’s Raoul Ruparel is quoted by the Telegraph saying, “EU countries are the biggest investors into South America and the EU is also the area’s biggest export market - so there is economic and political remit even if there isn't a legal one.”
Expansión Expansión 2 Cinco Días Telegraph Guardian European Voice EUobserver
Howarth: “Confusion over Financial Transaction Tax shows the European political elite is still in denial”
In an article for The Information Daily, Open Europe’s Christopher Howarth argues that supporters of a FTT “just have to admit defeat.” However that in “the fantasy world of EU politics you can one minute call for banks to pay more tax, the next minute to increase their capital and then move on to calling on them to lend more before yes you guessed it blaming the City of London and its irresponsible investments for the debt crisis.” He concludes that EU politicians are in denial; “For the avoidance of doubt, government debt is not created by financial markets – it is created by governments overspending.”
Meanwhile, City AM reports that banks have hired lawyers that may sue the EU if new rules on bankers’ bonuses are implemented by Brussels, which they claim could damage their businesses.
The Information Daily CityAM
Italy set to delay plans to balance its budget
The Italian government is due to adopt its economic and financial programming document for 2012-2014 today. A draft of the document, seen by Reuters, shows that Italy will raise its deficit target for 2013 from 0.1% to 0.5% of GDP, effectively delaying its plans to balance the budget by one year. According to the IMF, Italy will not be able to achieve a balanced budget at least until 2017, reports La Stampa. Meanwhile, the Italian Senate yesterday gave the final approval to the introduction of a balanced budget rule in the Italian constitution. More than two thirds of senators voted in favour, meaning that a referendum will not be required to confirm the decision, notes La Repubblica.
Repubblica La Stampa Reuters
Irish MP takes ‘fiscal treaty’ and ESM treaty to court;
German President: Constitutional Court will not “thwart” ESM treaty and ‘fiscal treaty’
EUobserver reports that, citing democratic concerns, Irish independent MP Thomas Pringle yesterday initiated legal proceedings at the Irish High Court against the treaty establishing the ESM, the eurozone’s permanent bailout fund, and the ‘fiscal treaty’ on budgetary discipline, on which Ireland is to hold a referendum. Meanwhile, following a meeting with European Commission President José Manuel Barroso in Brussels yesterday, German President Joachim Gauck said that he did not expect that the German government’s plans to ratify the ESM treaty and the ‘fiscal treaty’ would be “thwarted” by the country’s Constitutional Court.
Bild Bild 2 Süddeutsche Welt FAZ EUobserver EUobserver 2 EUobserver: Pringle
Polish regional development minister Elzbieta Bienkowska will tour Europe in an effort to persuade representatives of governments, parliaments, media and NGOs, in particular in countries that are net contributors to the EU budget that regional policy ought to remain as an EU wide development strategy and not a form of “charity” for less wealthy member states, reports Polish financial daily Forsal.
Forsal Open Europe Research: Off Target
In an op-ed, Die Welt’s Brussels correspondent Stefanie Bolzen argues that by increasing tax on diesel in order to reflect its higher energy content, the EU “passes the realities of its citizens by”, and that the “credibility of European policies is put at risk when citizens get the impression they are condemned to making savings while at the same time…being asked to foot the bill for the EU’s emissions reductions legislation…this threatens to reinforce the delicate impression that the Germans are paying for Europe on too many fronts”.
In an interview with NRC Handelsblad, Turkish President Abdullah Gül confirmed that Turkey will boycott the rotating EU presidency when it will be taken over by Cyprus in July, saying that it will only deal with the Commission.
NRC Handelsblad De Morgen: Scheffer
Slovak Prime Minister Robert Fico says in an interview with the FT that Slovakia’s days of opposing eurozone bailouts are over; “I will be very frank: Slovakia is a small country. We fully depend on German and French economies. We understand we are in the club”.
A Telegraph leader argues that the Home Secretary “should be congratulated for her determination to kick out Abu Qatada.”
Telegraph Telegraph: Leader Mail: Leader
The Alternative Investment Management Association (AIMA) has warned that new EU rules targeting hedge funds could harm financial stability. AIMA said yesterday that “If implemented without modification, the proposed Commission text could be disruptive to the asset management industry in the EU and globally.”
Open Europe research CityAM