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Greek Socialist leader suggests euro exit should not be ruled out

01 May 2012

In an interview with the Guardian, the leader of Greek Socialist PASOK party and former Finance Minister Evangelos Venizelos said, “There are certain misconceptions that worry me: for instance, the misconception that whatever happens we are not going to leave the euro.” He added, “Europe and the eurozone have no reason, rationally, to push Greece out of the euro. But this is a system in which many parties, many countries, many governments, many electorates participate and we could have events which, rationally, are not controllable.” Meanwhile, Les Echos reports that thousands of Greeks are expected to take to the streets and protest against austerity during the traditional May Day marches today.
Guardian: Venizelos Kathimerini  WSJ  BBC Le Monde Les Echos Les Echos 2

In an interview with Deutsche Mittelstands Nachrichten, the head of the German foundation for family enterprises, Prof. Brun-Hagen Hennerkes, argues that it is essential to restructure voting weights at the ECB’s governing council in order to address the “absurd” situation whereby Germany, which shoulders 27% of the risk burden, has the same voting weight as Cyprus and Malta.

Germany reiterates that growth can only come on the back of austerity
German Finance Minister Wolfgang Schäuble reiterated his support for austerity yesterday, saying, “The first precondition in order to have sustainable growth everywhere in Europe is fiscal consolidation.” Schäuble did however back the plans to increase the capital and lending capacity of the European Investment Bank (EIB), saying it had “good experience” of attracting private investment. EUobserver reports that EU officials have dismissed claims by El Pais that the remaining money in the European Financial Stability Mechanism (EFSM) will be used to help establish a growth fund.

Portugal approved its latest austerity budget yesterday, with the economy expected to contract by 3.3% this year and grow slightly next year.

The Italian government has announced that it will cut public spending by a further €4.2bn in 2012, in a bid to scrap the 2% VAT increase planned for October – although Italian Prime Minister Mario Monti told the press yesterday that a VAT rise cannot yet be ruled out completely. Separately, Spanish business daily Expansión reports that four of the eleven Spanish banks downgraded by S&P yesterday – BBVA, Bankia, Banco Sabadell and Banco Popular – are now considering terminating their contracts with the agency. Open Europe's Raoul Ruparel appeared on Al-Jazeera English News discussing the Spanish recession and the impact of austerity in the eurozone.

On his Telegraph blog, Mats Persson argues that commenting on what policies Eurozone countries – and in particular Germany – should do pursue in order to save the euro, including Eurobonds or ECB intervention, could prove a “diplomatic own goal” for David Cameron. Mats argues, “It’s particularly bad politics as the UK now has an opportunity to strengthen ties with Germany. Francois Hollande – a Keynesian who wants to spend his way out of the crisis (which may be more talk than action) – looks set to win the French presidential election. Cameron won’t break the Franco-German axis – nor should he try to. But he could create a lot of good will in Berlin by throwing his weight behind a Europe based on sound money and living within one’s means”.
FT Les Echos CityAM CityAM 2 WSJ CityAM 3 Telegraph Telegraph 2 Mail Kathimerini El País Expansión WSJ 3 Les Echos Le Monde EUobserver Il Sole 24 Ore FT 2 Corriere della Sera Cinco Días Süddeutsche FTD FT: Rachman FT: Hildebrand FT: Feldstein CityAM: Heath WSJ: Jolis Times: Manolopoulos Al-Jazeera English Telegraph: Persson

Bloomberg reports that Jean-Claude Juncker will not renew his term as chairman of the Eurogroup due to continuing Franco-German interference, arguing that, “They act as if they are the only members of the group.” Juncker’s term expires at the end of the month with German Finance Minister Wolfgang Schäuble is expected to succeed him.
Bloomberg EUobserver Il Sole 24 Ore Corriere della Sera  La Stampa

Hollande accused of being an “impostor” over EU treaty negotiations

Marine Le Pen, the French far-right leader, who described herself as the “centre of gravity of the 2012 elections” is expected to cast a blank vote on Sunday. The three main parties will all hold meetings in central Paris to celebrate Labour Day, amidst a highly charged political atmosphere.

Nicolas Sarkozy has threatened to sue Mediapart, after the French website published alleged evidence that former Libyan dictator Muammar Gaddafi had sponsored his 2007 election campaign.

Meanwhile, FAZ’s Paris correspondent Michaela Weigel argues that first round results proved that French voters had “not made their peace with Europe”, and “long to return to the cozy Europe of the Mitterrand era”.
Irish Times Times FT CityAM WSJ Telegraph Telegraph: Debt crisis live BBC Today Le Monde Le Monde 2 Les Echos BBC EurActiv Telegraph Independent BBC FAZ: Weigel

FT: EU’s 2013 budget demand is “politically tone deaf”
A leader in the FT argues that “while Brussels urges ever greater austerity, at heavy social and political cost, the EU has offered little more than token cost-cutting in return. The [2013] budget demand is politically tone deaf…the commission has pitched its offer artificially high, believing rightly that this will be cut back. Yet in this climate of general sacrifice, such tactics look out of place. A more realistic approach is needed, particularly as the EU budget has been in surplus since 2010”. The leader goes onto argue that “The only way substantially to cut the overall budget would be to reduce the expenditure on agriculture or structural funds. These account for almost 80% of the budget [but] much is spent in countries that need it least.

The leader also references the main finding from Open Europe’s factcheck of the budget proposal, i.e. that the Commission’s proposed job cuts only amounted to a total of six out of almost 41,000 jobs. Separately, Open Europe’s recent briefing which found that the cost to European taxpayers of funding the EU’s 52 quangos, agencies and committees had risen by 33% over two years was covered by Slovenian current affairs magazine Mladina. The article cited Open Europe’s breakdown which found that Slovenian taxpayers’ share of this was €8m per year.
FT: Leader Editorial Mladina Open Europe Research: EU Quangos

Romanian opposition leader Victor Ponta, who has been tasked with forming a new government following the collapse of the government on Friday, has said he will honour Romania’s agreements with the IMF and EU, reports Les Echos.
Les Echos

The Irish Times reports that Ireland’s Deputy PM Eamon Gilmore yesterday said rejecting the fiscal treaty in a referendum would plunge Ireland into unknown territory and there was no guarantee the IMF would provide funding.
Irish Times

Die Welt reports that German employees are among the most productive and cost efficient in Europe. Productivity per hour worked increased by 4% between 2005 and 2010 compared to the EU average of 3.4%. Unit labour costs only increased by 3.6% compared with the EU average of 6.2% over the same period, due to wage constraint.

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