30 January 2015

New poll: Only 16% of Germans in favour of Greek debt write-down

According to a new Emnid/N24 poll, 16% of Germans are in favour of writing down part of Greek debt, while 33% would only give Greece more to time to repay its debts. 43% of respondents are opposed to making any concessions to Greece at all. Meanwhile, new Greek Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis will today meet Eurogroup Chief Jeroen Dijsselbloem in Athens. The talks are expected to focus on Greece’s plan to organise an international conference to discuss a restructuring of Greek debt. Separately, Greek stock markets stabilised yesterday after the post-election freefall – with some of the country’s bank stocks rallying sharply. Allister Heath, Deputy Editor of The Daily Telegraph, cites Open Europe’s research showing that at least 77% of Greek public debt is currently held by the official sector – which makes a new restructuring more complicated.

Source: Open Europe blog N24 The Financial Times Kathimerini The New York Times The Daily Telegraph The Economist

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Former French PM: Time for France and Germany to start dialogue over EU reform with UK

In an op-ed for Le Figaro and Frankfurter Allgemeine Zeitung, France’s former centre-right Prime Minister François Fillon argues, “It is time for France and Germany to think about the answer to give to the British on the two issues they are concerned about: immigration and subsidiarity. Start from now, and together, the dialogue with David Cameron in order to clear the ambiguities and turn a threat into an opportunity to reform a European governance that is running out of steam.”

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Boris Johnson and Sajid Javid suggest that Brexit nothing to be scared of

In an interview with Time magazine, London Mayor Boris Johnson said, “I think Brexit is possible… [Britain] would very rapidly come to an alternative arrangement that protected our basic trading interests. I must be clear. I think there would be a pretty testy, scratchy period… [but] it wouldn’t be disastrous.”

Meanwhile, Culture Secretary Sajid Javid told The House Magazine, “My faith is in the British people. If they decide that, taking into account the renegotiation, they want to continue that relationship with the EU, of course that’s something everyone would accept. But if they decide to end that relationship then that is not something anyone should be frightened of.”

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French Economy Minister warns Germany against “balanced-budget fetishism”

French Economy Minister Emmanuel Macron yesterday urged again Germany to take steps to boost public investment, and warned, “The risk facing Germany is a new form of conservatism, which is balanced-budget fetishism.”

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Eurozone inflation to slip further into negative territory

New estimates released by the EU’s statistics office Eurostat this morning put the Eurozone’s annual inflation rate at -0.6% in January, down from -0.2% in December 2014. The annual core inflation rate, which excludes the prices of energy, food, alcohol and tobacco, is estimated at 0.5% – down from 0.7% in December 2014.

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Member states meet to discuss watering down Commission bank break-up proposals

The Financial Times reports that officials from France, the UK, Germany, Sweden and the Netherlands will meet today to discuss watering down European Commission proposals for new regulation to allow for the break-up of banks, with France and Britain expected to argue for maximum national leeway. The paper reports that EU Financial Services Commissioner Lord Hill has made clear that he would consider withdrawing the proposal altogether if there was protracted political deadlock.

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Capital Markets Union draft consultation paper proposes new powers for ESMA

A draft “green paper” on the EU’s Capital Markets Union plans, due to be presented by EU Financial Services Commissioner Lord Hill on 18 February, suggests that pension products, cross-border crowdfunding schemes and incentives for infrastructure investment will be some of his early priorities. However, Reuters reports that the paper also proposes giving the EU supervisors such as the European Securities and Markets Authority (ESMA) stronger powers arguing “To the extent the national supervisory regimes may result in differing investor protection standards … there may be a further role for the ESAs to play in increasing convergence.”

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EU foreign ministers agree to extend sanctions on Russia by six months but no new sanctions

EU foreign ministers yesterday agreed to extend existing sanctions against Russia for another six months, but failed to agree on any new tighter measures. The new Greek government, whose support was in doubt, ended up backing the extension. Open Europe’s Nina Schick appeared on Al-Jazeera English yesterday to discuss the issue.

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Election of new Italian President puts reform pact between Renzi and Berlusconi at risk

Voting to elect the new Italian President kicked off yesterday. Prime Minister Matteo Renzi has proposed Constitutional Court judge Sergio Mattarella as his party’s only candidate. Silvio Berlusconi has accused Renzi of making a unilateral decision and refused to back the Prime Minister’s candidate – suggesting this could mark the end of the pact on electoral and constitutional reform between the two. Mattarella could potentially be elected at the fourth ballot tomorrow, when the required majority becomes lower.

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ECB to launch new examination of banking bonus

The Irish Times reports that the ECB has announced a new examination of bank bonus payments saying remuneration “should be consistent with a bank’s ability to maintain a sound capital base.” The examination is expected to run throughout 2015.

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IMF: Irish taxpayers should not have taken on entire burden of bank bailout

The Financial Times reports that in a new report published yesterday, the IMF has criticised Eurozone policy makers for failing to impose losses on some bank creditors during the Irish bailout, arguing that risks for serious adverse spillover effects in other Eurozone countries – the rationale for forcing Irish taxpayers to take on the entirety of the country’s banks’ €64bn debt – were “not obvious”.

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Eurozone FTT set to launch in January 2016

EurActiv reports that ten of the eleven Eurozone member states committed to introducing the Financial Transactions Tax yesterday announced that the tax would be introduced on 1 January 2016. The countries issued a joint declaration which stated that the tax should rely on “low rates covering the broadest possible tax base, while taking into account the risk and the real economic impacts of delocalising the financial sector.”

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Danish central bank cuts interest rates again to maintain krona-euro peg

Denmark’s central bank yesterday cut its interest rates in a bid to maintain the country’s currency peg with the euro leaving the deposit rate at -0.5pc, the lowest on record. It is the third time in the space of ten days that the Danish central bank has cut its rates, a move forced upon it by the European Central Bank’s decision to launch a round of Quantitative Easing.

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