October 4, 2010

Press Summary Archive

Joseph Stiglitz: The “future prospects of the euro are bleak”

04 October 2010

The Sunday Telegraph quoted Nobel Prize winning economist Joseph Stiglitz saying that the “future prospects of the euro are bleak”. He said, “Europe created a solidarity fund to help new entrants into the European Union, most of whom were poorer than the others. But it failed to create a solidarity fund to help any part of the eurozone that was facing stress. Without some such fund, the future prospects of the euro are bleak.” He suggested that one way to save the euro would be for Germany to leave the eurozone, so allowing the currency to devalue and help struggling countries with exports.

The Sunday Times reported that Ireland is considering suspending its monthly auctions of government debt until January. The decision is aimed at calming the international markets after last week’s announcement that €50 billion will be needed to bailout the country’s main banks.   

Meanwhile, in a separate comment piece Dominic Lawson argued: “To an extraordinary extent, the movement towards economic and political union developed without the explicit consent of the peoples within its ambit. This democratic deficit is at least part of the reason there is a serious risk of rioting in the capitals of Europe, as measures to cut national deficits are accompanied by a political shrugging of shoulders and pointing in the direction of Brussels”.

The Mail on Sunday reported that, during his visit to Greece, Chinese Prime Minister Wen Jiabao said that China will keep on buying Greek bonds to prop up eurozone recovery.    

In the Sun, Trevor Kavanagh refers to Joseph Stiglitz’s warnings about the risk of the euro collapsing soon and argues: “Have we heard an apology from Tony Blair and Peter Mandelson – or even Ken Clarke, who split his party and scuppered three Tory election chances by siding with them?”

In the Telegraph, Roger Bootle looks at the gaps in competitiveness between eurozone countries and argues: “Within the eurozone, Germany operates a beggar-thy-neighbour approach indirectly. The euro has allowed its companies to gain competitiveness through cost cutting without seeing these gains eroded by currency appreciation [...] Bully for them – but hard cheese for everyone else”. 

In a separate article, Ambrose Evans-Pritchard stresses that, according to the latest IMF World Economic Outlook, the effects of the crisis could still get worse for weaker eurozone countries, due to the fact that they are not allowed to cut interest rates or devalue their currencies. He goes on to argue: “It is clear that Southern Europe will not recover for a long time [...] We are seeing a pattern – first in Ireland, now in Greece and Portugal – where cuts are failing to close the deficit as fast as hoped. Austerity itself is eroding tax revenues. Countries are chasing their own tail”.
FT FT 2 Telegraph: Evans-Pritchard Mail On Sunday EUobserver Telegraph Sunday Times Independent Weekend FT Weekend FT 2 Weekend FT: Leader Guardian: Lapavitsas Sunday Telegraph Sunday Telegraph 2

EU presses Ireland to raise its corporate tax rate
Saturday’s Times reports that a dispute over Ireland’s corporate tax rates erupted after Olli Rehn, the European Economic and Monetary Affairs Commissioner, said that it was a “fact of life” that Irish taxes would need to move into line with levels elsewhere in the eurozone. The Irish Department of Finance immediately defended its 12.5 percent corporate tax rate as “a cornerstone of Irish industrial policy”.
Times EUobserver

EU opens £25m offices in London
The Sunday Telegraph reported that the European Commission and European Parliament have spent £20m on new London headquarters and £5m on refurbishing them. The building in Smith Square, “Europe House”, has been fitted with a new roof terrace as well as conference facilities. Open Europe’s Stephen Booth was quoted saying, "The problem with the representations of the Commission and the European Parliament is that they tend to act more like lobbying groups defending the EU's every policy, rather than as information points or, heaven forbid, actually listening to the legitimate concerns of the majority of British citizens, who feel EU integration has gone too far.”
Sunday Telegraph

European Parliament doubles its entertainment allowance
The Sunday Times reported that the European Parliament’s Budget Committee has raised the EP’s entertainment fund from €1.1m to €2.1m. The entertainment budget helped to pay for an event called I Love EU, held in July in front of the parliament building. It featured pop bands and dance instructors teaching crowds a boogie routine in homage to the Manneken Pis, the urinating statue that is the symbol of Brussels.
Sunday Times

The News of the World reported that French President Nicolas Sarkozy and German Chancellor Angela Merkel would be in favour of David Miliband’s appointment as the new EU Foreign Minister. The paper quoted senior sources in Paris and Brussels. The FT reports that Foreign Secretary William Hague has denied he would nominate Miliband for the job.

German MP cannot see “any good” in Rehn’s proposal to penalise countries for economic imbalances
Handelsblatt reports that German officials are opposing EU Monetary Affairs Commissioner Olli Rehn’s proposal to penalise eurozone states for trade and competitiveness imbalances. Volker Wissing, Finance Spokesman of the FDP party, is quoted saying, “I cannot see anything good in this, penalising countries for their competitiveness. By doing this we would undermine the pillars of market economy”.

EU diplomats: France is set to become a more difficult partner for the EU
An article in the FT quotes a European diplomat saying: “The way things have evolved over the past year or two in the EU with the entry into force of the Lisbon treaty and the economic crisis has attracted Nicolas Sarkozy to that same Gaullist vision of Europe: a strong union under the leadership of two or three important figures, one of whom should always be French, and weak institutions”.

Meanwhile, in the Sunday Telegraph, Alasdair Palmer looked at the recent controversy between the French government and the European Commission on the deportations of Roma people and argued: “There seems to be only one country that rigorously enforces EU law to the letter: the UK. Although we complain about the EU’s directives more than any other member state, we alone have been afraid to call its bluff”.
Sunday Telegraph FT

The Weekend FT reported that, according to the consultancy firm Kinetic Partners, around 1,000 hedge fund managers have left London foregoing around £500m in taxes, fearing the new 50p tax rate and new regulation.
Weekend FT Weekend FT 2 Open Europe research

Sarkozy will use G20 Presidency to increase EU ties with Russia
Saturday’s Times reported that French President Nicolas Sarkozy will use his Presidency of the G20 to increase EU-Russian cooperation in areas such as as national security, diplomatic relations, economic policy, human rights and immigration. A leader in the paper argued, “Mr Sarkozy’s unappealing suggestions come at the worst possible moment. Britain cannot contemplate such a major change in the midst of a strategic defence review.”
Times: Leader Times

Open Europe was quoted by the Sunday Express in an article criticising Lord Peter Mandelson for receiving a transitional allowance worth about £100,000 per year from the European Commission on top of his £106,000 annual salary as Business Secretary.
No link

European Central Bank President Jean-Claude Trichet has said a financial transaction tax could only work if implemented across the globe, marking a setback for others who have argued that Europe could go it alone.

Voters in Latvia have re-elected the centre-right government led by Valdis Dombrovskis, according to nearly completed vote counts.
European Voice

Euractiv reports that EU Regional Policy Commissioner Johannes Hahn has said that the Brussels’ regional spending budget must remain the same if the EU is to meet its “Europe 2020” targets.