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New N24/Emnid poll: 59% of Germans believe UK exit would be damaging for the EU; FAZ: Emotional rejection of Cameron’s speech proves that the he hit the bullseye with his warning on the development of the EU

25 Jan 2013

Speaking at the Word Economic Forum in Davos, David Cameron argued that “It’s not just right for the UK. It’s necessary for Europe”. Cameron yesterday briefly met German Chancellor Angela Merkel, who said she was willing to discuss the UK’s calls for renegotiation, as well as a number of other EU leaders.  

A new N24-Emnid poll has found that 49% of Germans believe the EU is heading in the wrong direction compared with 20% who see the EU on the right track. 59% of Germans said that they believe that a British exit would damage the EU, with 19% believing it would be beneficial for the EU. Handelsblatt cites Hans Heinrich Driftmann, the President of the Association of German Chambers of Industry and Commerce as saying that “For Germany such an [UK] exit would be painful. After all the country is among out top 5 trading partners”. FAZ’s Holger Steltzner argues that “The emotional rejection of David Cameron’s keynote Europe speech proves that the British Prime Minister hit the bullseye with his warning on the development of the EU. His partners in Berlin, Paris, Rome and Brussels did not respond a single word towards his criticism of the status of the EU based on five principles”.

Meanwhile, Halbe Zijlstra, parliamentary leader of the governing VVD party, has called on the Dutch government to draw up a list of competences which should be governed at the national rather than EU level, as stipulated in the Dutch coalition agreement. Zijlstra suggests that education and social support should be national. He added that he believes the EU has overstepped its bounds and "that's why we are so incredibly happy that Cameron is engaging this discussion".

AP cites Open Europe’s calculation that 48% of the UK's goods and services exports are to the EU. Open Europe’s Pawel Swidlicki was interviewed by Polskie Radio in a special feature on the UK’s relationship with the EU, while Open Europe’s Stephen Booth appeared on Channel 5 News talking about Cameron’s speech.
FT FT 2 WSJ BBC FAZ FAZ: Frankenberger Süddeutsche Irish Times N24 Handelsblatt Welt Bild FAZ FAZ: Steltzner FAZ: Frankenberger Süddeutsche Polskie Radio AP RTL AD Trouw

Top European economists propose “jointly agreed euro exit” of Northern countries
At a joint event hosted by Open Europe and New Direction in Brussels yesterday, five European economists unveiled their ‘solidarity manifesto’ for the eurozone – in which they argue for “a jointly agreed [euro] exit of the most competitive countries...It would ultimately mean a return to national currencies or to different currencies serving groups of homogeneous countries.” Speaking at the event, Hans-Olaf Henkel – former head of the Federation of German Industry (BDI) – argued that the eurozone crisis is the result of “too much integration, too quickly” and warned that “the worst has yet to come” if things do not change. Stefan Kawalec, CEO of Capital Strategy and a former Deputy Polish Finance Minister, stressed that the proposal in the manifesto does not amount to “abandoning” the countries on the euro periphery, because “a weaker euro would help [them] restore growth.”  

Looking at France’s situation, Professor Brigitte Granville argued that “internal devaluation is not an option, especially when long-term unemployment is already at 10%.” She suggested France would benefit from leaving the euro, even if that means “sacrificing” its alignment with Germany. Italian Professor Claudio Borghi Aquilini noted that Italy is the perfect example of the risks involved in establishing a ‘fiscal union’ – given that there are the Northern regions (which he compared to Germany) sending money to the Southern regions (Greece) via the central government in Rome (Brussels), with very little impact on reducing the competitiveness gap between the two areas. He added that Italy’s euro membership turned out to be “one of those weddings which is better not to celebrate.”
Open Europe events
European Solidarity Manifesto  

New Populus poll: Small majority in favour of UK leaving the EU;
A new Populus poll for today’s Times has found that if an in/out referendum were held today, 40% would vote to leave, 37% would vote to stay, with 23% undecided. 60% of those wanting to leave could be open to staying in under renegotiated terms. The poll also revealed that David Cameron emerged as the leader most trusted to renegotiate Britain’s EU membership on 36%, ahead of Ed Miliband on 23%.  

The Economist’s leader argues that “Mr Cameron is taking an unnecessary risk with his country’s future. But his hand is stronger than some of his opponents maintain; and so, with a bit of luck, his gamble should pay off.”
Telegraph Independent Guardian Mail Irish Independent Economist: Leader Economist Economist 2 Economist 3 Economist: Bagehot Independent: Hamilton Guardian: Jenkins  

In a comment piece on Fair Observer, Open Europe's Pieter Cleppe highlights the Belgian political situation, noting that proponents of a more integrated eurozone should have a look at the country to make up their mind.
Fair Observer: Cleppe

The ECB announced this morning that 278 banks have pledged early repayment of €137.2bn of the loans taken under the ECB’s long term lending operation (LTRO). The FT reports that there is a growing concern that, with only stronger banks likely to have repaid their loans, a two-tier banking system could be created in Europe.

The European Commission announced yesterday that Britain should pay a fine of nearly €300,000 a day for failing to implement two EU directives on how gas and electricity markets operate in the EU. The deadline for member states to adopt the energy legislation was March 2011.
FT Mail Express Independent

New figures from the Spanish National Statistics Office (INE) show that Spain’s unemployment rate reached 26.02% at the end of 2012. Youth unemployment reached 55.13%, RTVE reports. Separately, Spanish Prime Minister Mariano Rajoy has said that the ‘declaration of sovereignty’ adopted by the Catalan parliament on Wednesday is “useless”.

Rehn: Cypriot bailout could require a reduction in government and bank debt
EU Economics Commissioner Olli Rehn said yesterday that any bailout of Cyprus would need to involve a substantial reduction of debt in “both the sovereign and the banking sector”. Rehn also added that any countries which see their banks recapitalised by the eurozone bailout fund, the ESM, would need to have “skin in the game”, suggesting that the fund would not take the full burden of such bank bailouts as had been hoped by some countries.
Economist WSJ  

Greek government strained by strikes
The Greek government has invoked a constitutional law in an attempt to end the eight day Athens Metro strike. However, the move provoked an angry response from other transit unions, which pledged to join the strike and also exposed rifts within the governing coalition as the Democratic Left criticising the lack of negotiation from both sides. Separately, the Greek current account posted a surplus in the third quarter of 2012, the first since 2005.
Kathimerini Kathimerini 2 Kathimerini 3

In a radio interview this morning, Italian caretaker Prime Minister Mario Monti said he was open to “cooperation” with Silvio Berlusconi’s PdL party after the elections, but only if Berlusconi gives up the leadership of the party. Meanwhile, a new Demos poll for La Repubblica puts the centre-left coalition led by Pier Luigi Bersani ahead on 38.1%, the centre-right coalition led by Berlusconi second on 25.8% and Monti’s centrist bloc third on 16.2%.
La Stampa
Repubblica FT

The Irish Times reports that the EU/IMF/ECB troika is considering providing a line of “comfort funding” to ease Ireland’s transition out of its bailout programme.
Irish Times

The FT reports that EU legislation on derivatives trading could be delayed further with MEPs likely to support a motion to reject the current rules presented by the European Securities and Markets Authority (ESMA).

Slovenia’s Prime Minister Janez Jansa yesterday refused to resign despite the resignation of Civic List party from his government coalition. Jansa said he would stay in office until there was a vote of no confidence, since Slovenia cannot afford early elections at this point in time.
AP Bloomberg  

FT reports that carbon prices on the European Union carbon emissions trading system fell to a record low of €2.81 a tonne after a vote in the European parliament against a proposal to support the struggling market.

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