August 24, 2010

Press Summary Archive

Professor Harald Uhlig: Germany should leave the eurozone

24 August 2010

EUobserver reports on a study released yesterday by research firm Markit which shows that economic recovery in the eurozone is slowing down, with the gap widening between Germany and the rest of the bloc. Marco Annunziata, Chief Economist at UniCredit, is quoted in the FT arguing: “My hunch is that we will see divergences widening”.

A study released yesterday by credit agency Moody’s notes that although overall growth in the eurozone is up it “may fall short of preventing credit-rating agencies from downgrading some member countries if their economies begin to suffer in the face of tight austerity budgets”. Spain could face a possible reduction in its credit rating in September, according to El Pais. Meanwhile, the European Central Bank (ECB) announced yesterday that it had again stepped up purchases of eurozone government bonds buying €338 million last week, up from just €10 million purchased a week earlier.

Writing in Les Echos, investment manager Alan Brown notes that "the German shock treatment will leave Southern European ‘on the dole’ for 10 years or more, while condemning the whole Eurozone and the PIIGS in particular to anaemic growth [...] It is very plausible that the euro breaks up through an exit of the most solid countries, thereby only leaving Portugal, Italy, Spain, Ireland and Greece in the euro". The front page of Handelsblatt warns there are "concerns about the German recovery. As the local economy is growing, the cooling down in the US, fears of overheating in China and the debt crisis in Southern Europe threaten to endanger exports".

Meanwhile, German Professor Harald Uhlig, who is Chairman of the University of Chicago's Department of Economics, writes on his Handelsblatt blog "should Germany leave the Euro? [...] Should the Neuro be introduced? Thereby bringing flexbility in the North-South Exchange rate?" He laments that "German politics has returned to the open cheque book policy of [former Chancellor Helmut] Kohl to solve Europe's problems [...] But maybe there will be a leading German female politician who has the courage, the backbone, to seriously discuss a Eurozone split up".
EUobserver FT WSJ BBC FT: Mallet WSJ: Rehn El Pais 1 El Pais 2 Reuters blog: Baker
Handelsblatt Handelsblatt 2 FT FT Alphaville Handelsblatt blog: Uhlig Les Echos: Brown

Open Europe’s Director Mats Persson is quoted in the Express commenting on the cost of EU officials pensions to UK taxpayers, which is expected to reach a yearly £177 million by 2013. “The EU’s pension system is unnecessarily generous, and completely out of step with demographic realities and the austerity measures facing public sector workers across Europe. The UK government must push hard for reform”, Mats said.
Express Express: Leader

Dutch government forming parties agree they will ask for an extra rebate on the EU budget
Dutch newspaper BN/De Stem reports that the parties currently negotiating the formation of the new Dutch government – the VVD, CDA and PVV – have agreed they want to keep the €1 billion rebate on the Dutch contribution to the EU budget, which the Netherlands obtained in 2005. On top of that, they will ask for a further reduction of the contribution when the negotiations on the 2014-2020 EU budget start. The article notes that the Netherlands is still the biggest per capita net contributor to the EU budget, paying €206 euro per person every year.
BN/De Stem Elsevier

Polish study: new member states marginalised from EU’s foreign service
Polish daily Dziennik Gazeta Prawna reports that a report by the Polish Institute of International Affairs (PISM) notes that only two of the 115 current EU ambassadors, who head up the soon to be EU embassies across the globe, come from central and eastern European member states. The WSJ’s New Europe blog notes that, according to the report, “knowledge of foreign languages other than the official languages of the European Union doesn’t seem to play a role in the selection process, and thus the head of the EU delegation to Moscow doesn’t speak Russian, and the ambassador to Ukraine doesn’t speak Ukrainian or Russian”.
Press Europ WSJ: New Europe blog

European Commission rejects French calls for postponement of Schengen entry for Romania and Bulgaria
Writing in Le Figaro, French Europe Minister Pierre Lellouche has hit back at claims that the repatriation of Roma violates EU rules on freedom of movement, arguing: “I would like to remind the European Commission […] that France, one of the founding members of the EU, is acting in full conformity with EU law”. 

EurActiv reports that Mr. Lellouche has also hinted at the possible postponement of Romania’s and Bulgaria’s entry into the border-free Schengen area if the two countries fail to integrate their Roma communities properly. However, Matthew Newman – a spokesman for Justice Commissioner Viviane Reding – has underlined that "the integration of minorities is not part of the Schengen acquis”.

EUobserver reports that several EU interior ministers will attend an informal meeting on immigration in Paris, on 6 September. The article notes that neither Romania nor Bulgaria have been invited to the summit at the moment.
Le Figaro EUobserver EurActiv Times El Mundo Corriere della Sera ANSA
Nouvel Observateur Le Point

Germany set to adopt a bank levy
Les Echos reports that the German government will adopt tomorrow its own bank tax. Sueddeutsche Zeitung notes that the levy Berlin is set to implement will apply to all financial institutions, including savings banks and building societies. Revenue from the new tax will be poured into a bailout fund for any future banking crises. Meanwhile, the FT reports that German plans are at odds with Britain’s proposal for a similar levy which could lead to some banks facing a double charge.
Sueddeutsche FT Les Echos

An editorial in FAZ notes that Markus Löning – who is Commissioner for Humanitarian Aid at the German Foreign Office – has criticised French President Nicolas Sarkozy’s proposal for the creation of an EU natural disaster rapid reaction force, describing it as unnecessary, cynical and extremely irritating in the light of the current situation in Pakistan.
No link

A leader in Handelsblatt further comments on Bundesbank President Axel Weber's calls for weak money policy until the end of the year, warning that "when too much money flows into one direction, a new bubble emerges. Not without justification, critics of central banks have indicated weak money policy as a source of the crisis".
Handelsblatt

Milano Finanza reports that the EU’s proposals for tougher regulation of derivatives have been criticised by several major energy companies for being too strict. According to the companies, the new rules would slow down investment, resulting in a reduction in efficiency and an increase in consumer prices.
Milano Finanza

A leader in the Express argues that EU free movement rules, which prohibit safety checks on nurses from across the EU working in the UK, “will rightly terrify patients and deeply concern other members of the medical profession.”
Express Express: Leader

Euractiv notes that the EU’s regional spending will be a subject of contention in the upcoming negotiations on the EU budget, with some of the big member states, such as the UK, pushing for renationalisation of cohesion policy and the largest recipients in Eastern Europe keen to see the funds remaining intact.
EurActiv Open Europe blog

The Nouvel Observateur notes that an opinion poll conducted by Viavoice has shown that 55 percent of French voters would currently prefer a victory of the left at the next presidential elections – scheduled for 2012. Meanwhile, La Tribune reports on rumours on the possibility of Michele Alliot-Marie – former Interior and Defence Minister – replacing François Fillon as French Prime Minister in a bid to give a boost to the remaining two years of President Nicolas Sarkozy’s mandate.  
La Tribune Nouvel Observateur