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David Cameron: “I don't believe leaving the EU would be best for Britain. Nor do I believe that voting to preserve the exact status quo would be right either”

03 Jul 2012

In his post-EU summit statement to the House of Commons, David Cameron responded to Conservative MPs’ requests for an EU referendum saying: “There are those who argue for an in-out referendum now. I don't agree with that because I don't believe leaving the EU would be best for Britain. Nor do I believe that voting to preserve the exact status quo would be right either.” Nearly 100 Conservative MPs including five Parliamentary Private Secretaries had written to the Prime Minister requesting a referendum in the next Parliament. During the debate, Andrea Leadsom MP confirmed that the ‘Fresh Start’ group would be launching their ‘Options for Change’ white paper on EU reform next week.

Open Europe are quoted in the FT as saying that “Steps towards greater eurozone integration and an increasingly sceptical UK public mean that the UK will almost certainly have to change its relationship with Europe, including new membership terms, which may have to be put to a referendum sooner or later.” Open Europe are also cited by Channel 4 News and EurActiv, while Open Europe’s Director Mats Persson appeared on Sky News discussing different referendum options. The Independent cites Open Europe’s recent report on CAP reform as an example of a policy area that could be devolved back to the UK.
FT CityAM Times Mail BBC Sun Irish Independent Irish Times Telegraph Guardian EurActiv Süddeutsche Independent: Richards FT: Rachman Times: Rifkind Telegraph: Johnston FT 2 FT 3 Independent EurActiv Channel 4 News Open Europe Research: EU Trade Open Europe Research: CAP reform

Spain dismisses threats by Finland and Netherlands to block ESM purchases of sovereign debt
Reuters reports that Finland and the Netherlands warned yesterday that they would block any moves to use the ESM, the eurozone’s permanent bailout fund, to purchase debt from struggling eurozone countries. However, Spanish Economy Minister Luis de Guindos warned that the two countries lack the majority to block such moves. Although decisions to purchase bonds under the ESM usually require unanimity, there is an ‘emergency procedure clause’ which allows for such decisions to be taken using a 85% majority, meaning the two countries could be outvoted. Finnish Prime Minister Jyrki Katainen also warned that he does not expect the single eurozone financial supervisor to be set up for at least a year.

Separately, Spanish Prime Minister Mariano Rajoy said yesterday that Spanish regions “are making big efforts, but will have to make even bigger ones” to cut their deficits. Spanish Economy Minister Luis de Guindos said this morning that the government will announce new budget cuts “over the next few weeks” to make sure that Spain meets the deficit targets agreed with the European Commission, reports Expansión.
Reuters WSJ BBC EurActiv Irish Independent Telegraph Le Monde EUobserver Il Sole 24 Ore El País El País 2 Cinco Días CityAM FAZ YLE FT: Dinmore CityAM: Schlichter WSJ: Will Le Figaro El País El País 2 Expansión Corriere della Sera La Stampa

Troika officials arrive in Cyprus to negotiate bailout;
Former finance minister: At this rate, Greece won’t be able to return to the markets before 2020
Officials from the EU, IMF and ECB are due to arrive in Cyprus today to start negotiations over the country’s rescue package. Meanwhile, the Cypriot government yesterday completed the €1.8bn recapitalisation of Popular Bank, its second-biggest bank.

Separately, Greece’s former Finance Minister Panagiotis Roumeliotis told Les Echos in an interview, “The biggest problem to solve [for Greece] is to stop the recession being an obstacle to the implementation of the bailout programme. Otherwise, at this rate, Greece won’t be able to finance itself on the markets before 2020.” According to sources quoted by Kathimerini, the Greek government has decided not to push for direct recapitalisation of its banks via the eurozone’s bailout funds for the moment, as it will insist on obtaining an extension of its deficit reduction targets.
Kathimerini Kathimerini 2 Kathimerini 3 Kathimerini 4 Kathimerini 5 Les Echos: Roumeliotis WSJ BBC EurActiv Irish Times ntvmsnbc RTBF Observateur

Open Europe is this morning giving evidence to the House of Lords’ EU Committee on the eurozone crisis.
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Christopher Howarth: “The Conservative Party should drop its short-sighted support for Euro Fiscal Federalism”
Alan Posener: “UK is more important to Germany than ever before”
Open Europe’s Christopher Howarth has an article on Conservative Home in which he questions the consistency of David Cameron’s support for eurozone integration saying it amounts to “do as we say not as we do”. He concludes that ” rather than waste his time irritating the Germans, David Cameron needs to set out the vision for the UK in a new Europe, which he himself – encouragingly - now has called for. Tactical support for Euro fiscal federalism is not it.”

In an op-ed entitled “Great Britain is the new example for Europe”, Die Welt’s political editor Alan Posener argues that “it is a persistent misconception to regard the British as bad Europeans. It probably is based on the fact that they stubbornly resist the logic of ‘ever closer union’… in trying to make the eurozone into an alternative system to that of Anglo-Saxon capitalism we could cynically remark: have fun with setting up this alternative system of ‘regulation and solidarity’ without Great Britain but with Greece, Italy, Spain and co. – and with the France of Francois Hollande… Now that the dream of the euro is turning into a never-ending nightmare, the UK is more important to Germany than ever before.”
Conservative Home: Howarth Welt: Posener

Austrian and Dutch parliaments set to ratify ESM;
Spiegel: German Constitutional Court could issue temporary injunction against ESM
The Austrian Parliament is set to ratify the ESM treaty tomorrow after the opposition Green party announced it would vote in favour, enabling the government to secure a constitutionally binding two-thirds majority. Meanwhile the Upper House of the Dutch Parliament is also expected to ratify the ESM today, although one of its legal advisors has warned that the treaty will have to be ratified yet again following the agreement at last week’s EU summit to allow the ESM to lend directly to banks. Het Financieele Dagblad reports that Dutch PM Mark Rutte wants to avoid this scenario. However, Expansión reports that a spokesman for the European Commission has claimed that it is not necessary to change the ESM treaty to allow for direct bank recapitalisation.

The German Constitutional Court will hold an oral hearing on July 10 into the constitutional compatibility of the fiscal pact and the eurozone’s permanent bailout fund, the ESM. Der Spiegel reports that the Court could grant a temporary injunction which would further delay the launch of the ESM.

Meanwhile, the Bundestag will hold an extraordinary plenary session in the week beginning 23 July in order to vote on Spain’s request for €100bn to bail out its banks, although it is not clear whether the vote will be binding on the government. Süddeutsche reports that the ‘Berlin group’ of politicians from Angela Merkel’s CDU party who are critical of her handling of the eurozone crisis will present a ‘founding manifesto’ in August elaborating on their position. Open Europe’s recent discussion on Franco-German relations with CSU MP Thomas Silberhorn is cited by Reuters.
FAZ Spiegel Welt La Tribune FD FD 2 Expansión Reuters Open Europe Events

Ireland has seen its borrowing costs fall to pre-crisis levels following suggestions that, under the deal agreed at last week’s EU summit, it could see some of the debt burden from bailing out its banks moved off its official debt levels. The FT notes that, since the value of the banks have fallen significantly since they were bailed out by the Irish state, the government is unlikely to recover all of its money.
FT FT 2 Irish Times

In a report released yesterday, rating agency Fitch welcomed the plans for a single eurozone financial supervisor but warned that the proposal remains vague, subject to political obstacles and provides no detail for how the regulator will account for the vastly different banking systems and structures in each eurozone country.

EUobserver reports that a survey by the German Sentix research group found on Monday that at least 55% of investors polled expect at least one country to leave the eurozone within a year.

Eurozone unemployment hit 11.1% in May, its highest level since records began in 1995. Meanwhile, manufacturing data also showed a contraction in the eurozone, with Spain, Italy, Greece and France showing heavy declines.
BBC Irish Independent Telegraph Guardian CityAM WSJ CityAM 2

MEPs have postponed the vote on the proposed new EU patent following the concessions made to David Cameron at the recent EU summit on reducing the competence of the European Court of Justice in litigation matters, effectively blocking the proposal EUobserver reports.

FT Deutschland reports that ECB staff are suffering from high stress levels which is threatening the ECB's operational capacity, according to trade unions.

The EU is facing a delay to solving the global row on aviation emissions, with an agreement unlikely to be reached until October 2013. EU officials have warned they will not bow to pressure from countries such as China and India, who are refusing to adhere to a new EU law enforced in January aimed at curbing airline emissions.

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