30 March 2015

Victory for the UK as ECB abandons push to move euro clearing inside Eurozone

The ECB and the Bank of England yesterday announced “a series of measures aimed at enhancing financial stability in relation to centrally cleared markets within the EU.” The move will include “extending the scope” of the Euro/Pound swap lines between the banks. As part of the deal, the UK will drop its remaining cases at the European Court of Justice against the ECB push to move the clearing of euros inside the Eurozone. The move marks the end of the four year dispute and a significant victory for the UK. Open Europe’s Raoul Ruparel is quoted by The Financial Times arguing that the outcome highlights the merits of taking legal action when necessary, saying, “Far from creating divergence, it has helped foster co-operation and set the boundaries for what can be done under the single market…Finally, it has also helped to check the power of the ECB which has become increasingly influential yet lacks any real oversight.”

Source: ECB Press release The Financial Times Open Europe blog

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Labour, Lib Dems and SNP restate opposition to Conservatives’ plea for EU referendum

Writing in City AM ahead of the launch of the Labour Party’s business manifesto, Labour leader Ed Miliband restates his opposition to David Cameron’s promise of an In/Out EU referendum saying, “This is a recipe for two years of uncertainty and chaos, when inward investors will hold off, businesses will be held back from planning for the future.” Separately Lib Dem Leader Nick Clegg has told BBC Radio 4 Today’s programme that, “Of course there should be a [in/out] referendum …when we need to make a decision on transfer of new powers… If you want a referendum in all circumstances, then clearly don’t vote Liberal Democrat.” This follows Liberal Democrat Energy Minister Ed Davey telling The Observer that it will be “incredibly difficult” to enter into coalition with the Conservatives again because of differences over EU and climate policies.

Meanwhile, speaking to his party’s conference, SNP Depute Leader Stewart Hosie has said, “We will oppose an in/out referendum on Europe. And if there is one – we will campaign to stay in. And as Nicola Sturgeon has said, we will insist on a “Double Lock” – so that Scotland cannot be dragged out of the EU against her will.”

Source: The Financial Times City AM City AM: Miliband BBC Radio 4 today: Clegg SNP: Press release

Greek reform proposals underwhelm as government faces cash crisis within weeks

Greek officials travelled to Brussels over the weekend to discuss their reform proposals which are due to be officially submitted today. However, Eurozone officials have suggested that the proposals are too vague and piecemeal. The reforms are said to focus on tax collection but with little on key areas such as pension and labour market reform. It is unlikely a deal will be agreed until 9 April, with a meeting of Eurozone finance ministers unlikely until then, meaning the Greek government will run very short of cash.

Meanwhile, Deputy Finance Minister Dimitris Mardas told Naftemporiki, “The government has not abandoned any claim regarding its aim to make the country’s debt viable.” In an interview with The Financial Times, Mardas also stressed that the government would pay pensions and salaries to the end of March but could not guarantee payments to the IMF in April. Fitch rating agency warned on Friday evening that, if Greece failed to make payments to the IMF, it would be considered to be in default on all its private sector bonds due to cross-default clauses. For this reason, Fitch downgraded Greece’s rating.

Separately, Russia’s Ambassador in Athens, Andrey Maslov, has said the Greek Prime Minister Alexis Tsipras’ visit to Moscow on 8 April will be a “big event” and that any request for financial aid from Greece would be examined “carefully”. Open Europe’s Raoul Ruparel is quoted by The Sunday Telegraph discussing the evolution of the Greek crisis.

Source: The Wall Street Journal Kathimerini Bloomberg The Financial Times The Sunday Telegraph Fitch Frankfurter Allgemeine Zeitung

Landslide victory for Sarkozy in French local elections, as Front National also makes important gains

The centre-right alliance composed of Nicolas Sarkozy’s UMP and the smaller centrist parties UDI and MoDem won a landslide victory in the second round of the French local elections yesterday, as 28 out of 101 French departments swung from the centre-left to the centre-right. As a result, French centre-right parties now control 67 departments – compared to only 34 governed by either President François Hollande’s Socialist Party or other left-wing parties. Marine Le Pen’s anti-euro Front National failed to secure any departments, but saw 62 of its candidates elected as departmental councillors – a big gain on the 2011 elections, when only two Front National candidates were elected. It is still unclear whether the resounding defeat will lead Hollande to announce another cabinet reshuffle in the coming days.

Source: Le Figaro Le Monde The Financial Times Süddeutsche Zeitung

EU banking regulator stresses importance of City of London for Europe

Andrea Enria, Chairman of the London-based European Banking Authority (EBA), told The Daily Telegraph, “There are more than one million jobs in the financial industry here [in London], 80% of the European hedge fund industry is located here, 70% of private equity and three quarters of the investment banking and capital markets activity is transacted in London, so London is an important hub for the EU.” He added, “I think there’s a strong interest in London and the UK financial industry in maintaining this role [as the EU’s financial hub], and there is, in my view, a strong interest for the European financial markets in maintaining this link.”

Source: The Daily Telegraph

Italian Foreign Minister hints at easing of EU sanctions on Russia if situation improves

Italian Foreign Minister Paolo Gentiloni told The Financial Times, “Could Europe lift sanctions [against Russia] by the end of June as a whole? I don’t think so. But if the question is: is some kind of lifting possible if the situation has significantly improved? It could be – even perhaps a symbolic decision. When you deal with persons on the [sanctions] list, you can add or erase persons and we’ve done it several times in the past.”

Source: The Financial Times

New study suggests pace of immigration to UK has slowed since 2010

A study by the Oxford-based Migration Observatory, commissioned by The Financial Times, has found that 117,000 fewer working migrants arrived in the UK since the 2010 election than during the previous Labour term in office – a decrease of 16%. There has been a rise of 40% in jobseekers from the ‘old EU’, such as Italy, Spain and Portugal. This has been offset by a 35% fall in working migrants from the eight eastern EU countries that joined in 2004, and a drop of more than a quarter in those arriving from outside Europe.

Source: The Financial Times

Ireland’s doctors will not be compliant with EU working time rule until 2017

It will be 2017 at the earliest before most of Ireland’s non-consultant hospital doctors see their working hours complying with limits set out in the EU’s Working Time Directive, the Irish Times reports. Ireland’s health service said compliance with the 48-hour week stipulated in the directive could not be achieved without significant service reconfiguration.

Source: The Irish Times

Stephen Booth: There is a life outside the EU, but do not believe anybody who says it will all be easy

Writing in the Yorkshire Post, Open Europe Research Director Stephen Booth argued, “There is a life outside the EU, but do not believe anybody who says it will all be easy. Similarly, those who suggest that Brexit would be an economic disaster are also wide of the mark. What matters most is whether Britain is prepared to do what it takes be the outward looking business-friendly country it would need to be to prosper outside of the EU.”

Separately, writing for Conservative Home about Open Europe’s recent report on the potential implications of the UK leaving the EU, Christopher Howarth argues that “The challenge to those who wish to make an economic argument for Brexit is not that it does not exist, but that it involves some difficult decisions. Deregulation and a reduction in trade protectionisms are not universally popular, or even universally popular among advocates of Brexit.”