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EU summit fails to yield any proposals on fiscal stimulus or Greece; German Social Democrats row back on support for eurobonds

24 May 2012

EU leaders once again failed to provide any concrete proposals for tackling the eurozone crisis at last night’s informal EU summit. The summit did agree on tasking the Commission with drawing up plans for moving towards a European bank deposit guarantee scheme and Eurobonds which will be presented and discussed at the June summit. However, Council President Herman Van Rompuy warned that even then such discussions would only be “preliminary”. The Franco-German divisions over eurobonds continued at the summit, while Die Welt reports that the SPD has retracted its previous support for eurobonds, thereby distancing themselves from their French counterparts. Thomas Oppermann, the party’s speaker in the Bundestag is quoted as saying: “We oppose the uncontrolled pooling of debt…There is absolutely no need for general eurobonds”. Oppermann added that “I speak for [Germany] and not for France”.  

Van Rompuy also said the European Investment Bank would produce proposals for increasing its capital and present them at the June meeting. Additionally, Irish Prime Minister Enda Kenny said there was “strong support” for the plans to allow the ESM, the eurozone’s permanent bailout fund, to lend directly to banks.  

EU leaders stressed that they wanted Greece to stay in the euro but called on the country to stick to its commitments. The FT reports that, according to unnamed officials, there had not been any in-depth discussions about Greece during more than six hours of deliberations. IMF Director Christine Lagarde said there is an “inconsistency” between wanting to stay in the euro but not accepting the necessary reforms to do so.  

Meanwhile, in its monthly report the Bundesbank warned that any dilution of the current bailout agreements would dent confidence in the eurozone, adding that any exit of Greece would be “manageable”. Reuters reported yesterday that a Eurogroup working group had called on eurozone members to develop contingency plans for dealing with a Greek exit, although this was later dismissed by the Greek Finance Ministry. However, Belgian Finance Minister Steven Vanackere said later in the day, “to say that we don't have a contingency plan would be irresponsible”.
FT FT 2 CityAM  FT 3 CityAM 2 CityAM 3 BBC EurActiv European Voice Mail Mail 2 Telegraph Telegraph 2 Sun Welt European Voice EurActiv European Voice 2 EUobserver Il Sole 24 Ore Kathimerini 3 Irish Times Times Guardian Times Guardian Le Monde Le Monde 2 Les Echos Les Echos 2 Les Echos 3 Les Echos 4 Les Echos 5 Les Echos 6 La Tribune Irish Times Le Figaro Independent IHT EUobserver 2 La Stampa Süddeutsche El País Repubblica  El Mundo Reuters Welt Süddeutsche Kathimerini Kathimerini 2 Reuters 2 Telegraph Times Guardian Guardian 2 FT 4 Welt Handelsblatt FAZ  

Handelsblatt reports that a new group called the ‘Anti-ESM Alliance’ has been set up to oppose increasing German taxpayers’ liabilities under the eurozone bailouts, comprising of ten MPs from Angela Merkel’s coalition, business groups and civil society organisations.
Handelsblatt Handelsblatt 2 Focus Hamburger Abendblatt  

Spanish government sources told Reuters that Spanish regions will have to refinance a total of €36bn of debt this year – as opposed to the €8bn figure made public previously. The difference is due to bilateral loans from Spanish banks to the regions worth €28bn that were not disclosed before.
FT CityAM Telegraph Il Sole 24 Ore Expansión Reuters El País Les Echos Les Echos  

Bild reports that Vicky Voulvoukeli, an MP from the right-wing populist Independent Greeks party has called for Germany to pay Greece up to €70bn in lapsed WWII reparations, arguing that “Germany ought to face up to its historic responsibility”.
Bild Welt  

Reuters reports that EU leaders discussed measures to wind up or reorganise insolvent banks yesterday in order to avoid a repeat of the bailouts during the financial crisis.

In the FT, Open Europe board member Sir Martin Jacomb sets out his plan for a break-up of the eurozone, noting, “There must be no advance warning. Experience shows that currency break-ups, like devaluations, have to be handled so as to avoid anticipatory speculative activity. The essential requirement is a single, unequivocal decision to revert to national currencies, reached confidentially by all 17 governments and announced without prior notice.”
FT: Jacomb FT: Lapavitsas Telegraph: Reece King: Times  

The European Commission is set to propose changes next week to the way that member states can use the EU database, which holds the fingerprints of anyone who has applied for asylum in an EU country.
European Voice Open Europe Research: Crime and Policing Open Europe Research: Immigration and Asylum

Hollande repeals Sarkozy’s pension reforms and increases minimum wage
French President Francois Hollande will partially repeal by presidential decree his predecessor Nicolas Sarkozy’s pension reform, which raised the retirement age to 62. Under the new scheme, expected to cost €1bn, all those who have worked for more than 41 years will be eligible for retirement at the age of 60. Employment Minister Michel Sapin announced this morning that the minimum wage would be “boosted”, fulfilling Hollande’s campaign pledge, but ruled out a significant increase.
Guardian Le Monde Les Echos  

Cameron: I will fight FTT all the way
The European Parliament yesterday voted overwhelmingly in favour of an EU-wide financial transaction tax. In today’s Le Figaro, EU Tax Commissioner Algirdas Semeta writes that the tax would be used for “focused investment and fiscal reforms to boost growth”. Following yesterday’s informal European Council summit, David Cameron criticised the FTT as a “bad idea - it will put up the cost of people’s insurance, put up the cost of people’s pensions, it will cost many jobs [and] make Europe less competitive. I will fight it all the way”.
CityAM Irish Times Le Monde Les Echos La Tribune Telegraph Telegraph 2 Le Figaro: Semeta

David Cameron told the House of Commons yesterday that he will back Parliament’s decision not to give prisoners the vote rather than follow a ruling by the European Court of Human Rights, arguing that “I believe this should be a matter for Parliament to decide, not a foreign court”.
Mail Telegraph

In an interview with the Spectator, UKIP leader Nigel Farage said he would consider standing joint UKIP-Tory candidates in a general election, claiming that “I do know there are Conservative associations up and down the country who think this could be a way forward”.
Conservative Home Spectator: No link 

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