26 February 2015

Significant increase in net immigration to the UK among both non-EU and EU migrants

Net long-term migration to the UK was estimated to be 298,000 in the year ending September 2014, a statistically significant increase from 210,000 in the previous twelve months, according to the latest ONS statistics published today. Of the 624,000 people that immigrated to the UK in the year ending September 2014, there were statistically significant increases for immigration of non-EU citizens (up 49,000 to 292,000) and EU citizens (up 43,000 to 251,000).

Separately, the Daily Telegraph cites University College London research which found that one in ten of Britain’s most highly skilled workers are emigrating and in their place the UK has attracted more than two million migrants with low numeracy skills. Dr John Jerrim, of the UCL Institute of Education, said, “Immigration has therefore had its biggest impact upon the bottom end of the numeracy skill distribution; it has led to a significant increase in the supply of low skilled workers.”

Source: ONS The Daily Telegraph Open Europe Intelligence

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Greek Finance Minister warns that the country will struggle to make payments to IMF and ECB in coming months

In an interview with Alpha radio, Greek Finance Minister Yanis Varoufakis said, “We will definitely have problems in making debt payments to the IMF now and to the ECB in July.” In an interview with CNBC, he added “Europe is going to find a way of dealing with the cash flow problem. Can you imagine allowing the Eurozone to fragment over a few billion euros?” He suggested that the ECB release the profits from its holding of Greek bonds directly to the IMF – despite the release currently being conditional upon reforms. Speaking to Bloomberg, Varoufakis estimated that €700m in deposits had returned to Greek banks on Tuesday alone.

Meanwhile, Greek Prime Minister Alexis Tsipras yesterday held a ten-hour closed door meeting with his Syriza MPs in an attempt to assuage any concerns over the extension of Greece’s financial assistance programme and ensure they vote to approve it in the parliament. Energy Minister Panagiotis Lafazanis is reported to have raised concerns.

Separately, German paper Bild today devotes an entire page of the paper to urging German MPs to vote against the extension, with the headline, “NO! No more billions to the Greedy Greeks!” In a letter to the Bundestag, Kurt Lauk, president of the CDU’s Economic Council, said, “A simple extension of the aid programme without effective terms would mean that we are knowingly throwing further good money to bad.” In a special sitting of the CDU/CSU parliamentary faction of the Bundestag yesterday, 22 MPs voted against extending the current programme for Greece, and five abstained out of 311 MPs. All SPD MPs voted in favour of the programme in a separate party sitting this morning.

Source: Kathimerini Reuters The Financial Times Handeslblatt

EU Commission proposes granting France new deficit target delay

The European Commission has proposed giving France until 2017 – two years later than initially agreed – to cut its deficit below 3% of GDP. In return, the French government will have to cut its structural deficit by an additional 0.2% of GDP this year and will have to submit an upgraded reform plan to the Commission by the end of April. Italy and Belgium have also dodged infraction procedures for not reducing their public debt quickly enough, since the Commission has taken into account the bad economic circumstances both countries have been facing. Meanwhile, Germany has been asked to take “decisive policy action” to address its excessive trade surplus and increase the level of private and public investment.

Source: The Financial Times The Wall Street Journal Le Figaro La Repubblica

ECB faces struggle in sourcing enough bonds for QE

The Wall Street Journal reports that the ECB may struggle to source enough high quality bonds to purchase under its upcoming Quantitative Easing programme, since many investors see a lack of good alternatives and/or need to hold such bonds for regulatory requirements. ECB Executive Board Member Peter Praet said in an interview with Belgian magazine Trends, “We hear that pension funds and insurers don’t want to sell…But banks will probably rise to the bait…Institutions outside the Eurozone also have large holdings of government bonds. They can sell too.”

Source: The Wall Street Journal

Christopher Howarth: Could the Conservative party strike an EU referendum bargain with the SNP?

Writing for Conservative Home, Open Europe’s Christopher Howarth looks at the possibility that the Scottish Nationalist SNP could back an EU referendum in return for the Conservative Party offering another independence referendum should the UK vote to leave the EU with Scottish voters voting to stay put.

Source: Conservative Home: Howarth

Cyprus signs deal allowing Russian navy to use its ports

Russia yesterday signed an agreement with Cyprus that will give the Russian navy the right to use Cypriot ports. President Vladimir Putin said, “Our friendly ties aren’t aimed against anyone. I don’t think it should cause worries anywhere.”

Source: The Wall Street Journal Reuters

UK Supreme court upholds decision to shift EU structural funds from South Yorkshire and Merseyside to Scotland and Wales

The UK Supreme Court yesterday voted to uphold Business Secretary Vince Cable’s decision to move £50m in EU structural funds, originally earmarked for the South Yorkshire and Merseyside regions, to Scotland and Wales instead to help cushion the blow of the overall cut to the UK’s receipts over the course of the EU’s 2014-2020 budget. The result is that funding for the Highlands and Islands region of Scotland will be €478 per capita compared to €117 in South Yorkshire.

Source: Open Europe Intelligence: Off Target Yorkshire Post

New report finds that EU regulatory regime for GM crops is not fit for purpose

A report by the House of Commons’ Science and Technology Select Committee has identified three major flaws in the EU’s regulatory regime for genetically modified crops – it is based on the assumption that genetically modified crops inherently pose greater risk than other crops, it fails to balance risks with the potential benefits, and it prevents member states from making their own decisions about whether or not to adopt GM products. The committee’s chair, Andrew Miller MP, is quoted as saying that the EU regulations have “driven research activity out of the EU and put at risk the UK’s ability to be a global player in advancing agricultural technology. Regulatory reform is no longer merely an option, it is a necessity.”

Source: Science and Technology select committee report Reuters

Results of EU antitrust investigation into Gazprom could be presented within weeks

The European Commission’s Vice-President in charge of energy, Maroš Šefčovič, suggested yesterday that the results of an EU antitrust probe into Russian energy giant Gazprom could be presented “in a matter of weeks”. The Wall Street Journal notes that the EU has been investigating concerns about Gazprom’s pricing and other practices for over two years.

Source: The Financial Times The Wall Street Journal

Open Europe to launch “Brexit Barometer” and study on economic impact of UK leaving the EU
Open_Europe_Brexit_Barometer E1424948098294

Open Europe has this morning launched its new Brexit Barometer which currently estimates the chance of the UK leaving the EU during the next parliament at 17%. The barometer provides an assessment of the chances of the UK leaving the EU, all the way up to and following the General Election. The probability is based on a number of contingent factors including: the make-up of the next government, the likelihood of that government holding a referendum and the potential outcome of an In/Out referendum. It also factors in how strongly the next government will push for EU reform and how open and willing the rest of the EU is to reform, based on Open Europe analysis. Open Europe will this evening hold an event – ‘Betting on Brexit’ – in partnership with Ladbrokes to examine the issue further. Separately, Open Europe will soon release a series of reports looking in depth at the economic impact of a Brexit on the UK and how such an event may take place.

Join the conversation on twitter via #BetOnBrexit