Denmark's Margrethe Vestager, center, with her counterparts in Copenhagen this weekend.
Following our story Saturday and subsequent blog post on two confidential economic analyses prepared for European finance ministers in Copenhagen which paint a less-than-confident picture of the eurozone crisis, we here at Brussels Blog have received multiple requests for more on their contents. Read more
US treasury secretary Timothy Geithner
Timothy Geithner, the US treasury secretary, has occasionally irked his European counterparts with attempts to influence the eurozone’s crisis policymaking, but European officials will be closely listening to him as the clock ticks down to next month’s spring meetings of the International Monetary Fund.
European Union leaders hope to get non-eurozone backing to double the IMF’s funding to $1tn at the gathering. Although the US won’t contribute, Washington is the IMF’s largest shareholder and is widely believed to be behind the insistence of Christine Lagarde, the IMF chief, that no increase will be forthcoming unless the eurozone increases the size of its own €500bn rescue system.
Those interested in tea leaf reading will get their chance today, when Geithner testifies on Capital Hill on the eurozone crisis. The House financial services committee, where Geithner will appear, helpfully released his testimony last night, and it makes clear Geithner is in no mood to back down. Read more
Portuguese prime minister Pedro Passos Coelho arriving at Monday's EU summit in Brussels
As financial markets watch with nervous anticipation the outcome of the tense negotiations over Greece’s debt restructuring, there is clear evidence that bond investors believe Portugal could be next, despite repeated insistence by European leaders that Greece is “an exceptional and unique case” – a stance reiterated at Monday’s summit.
Portugal’s benchmark 10-year bonds were over 17.3 per cent this week, though things have eased off a bit today. Those are levels seen only by Greece and are a sign the markets don’t believe Lisbon will be able to return to the private markets when its bailout ends next year. Default, the thinking goes, then becomes inevitable.
But are Greece and Portugal really comparable? Portugal certainly shares more problems with Greece (slow growth, uncompetitive economy) than with Ireland and Spain (housing bubbles, bank collapses). But unlike Greece, where talk of an inevitable default was the topic of whispered gossip in Brussels’ corridors from almost the moment of its first €110bn bailout, there is no such buzz about Portugal.
More concretely, the latest report by the European Commission on the €78bn Portuguese bail-out, published just a couple weeks ago, paints a much different picture for Lisbon than for Athens. An in-depth look at the largely overlooked report after the jump… Read more
French president Nicolas Sarkozy arrives at the summit this morning.
The big European Union summit will be divided in two parts today, with all 27 EU leaders meeting in the morning before the session is narrowed to the 17 members of the eurozone in the afternoon.
The Brussels Blog has obtained a copy of the 12-page draft of the morning gathering’s communiqué, circulated to summiteers this morning, and unless things change at the meeting, it looks like there will be no final decision on the one thing the 27 had hoped to finish today – a plan to recapitalise Europe’s banks.
The draft “welcomes progress made” by EU finance ministers during their 10-hour meeting on Saturday, but says the work will not be officially signed off until another meeting on Wednesday – the first official acknowledgement that leaders from all 27 EU countries (and not just the eurozone) will have to meet again next week. Whether that meeting will be the heads of all 27 governments or just their finance ministers remains to be seen. Read more
From our foreign affairs blog:
Welcome to our continuing coverage of the eurozone crisis. All times are London time. Curated by Esther Bintliff and John Aglionby on the world news desk in London, with contributions from FT correspondents around the world. This post should update automatically every few minutes, although it may take longer on mobile devices.
Put it down to all those bankers and Eurocrats: Luxembourgers are once again Europe’s richest citizens.
The Grand Duchy’s gross domestic product per person is 283 per cent of the EU average, according to 2010 data released this morning by Eurostat — itself based in Luxembourg. That’s a whopping 6.6 times larger than Bulgaria, the bloc’s laggard, whose GDP per person is a mere 43 per cent of EU output.
That gap between richest and poorest is 0.2 points larger than last year both because Luxembourg’s GDP share rose (from 272 per cent) and Bulgaria’s dropped (from 44 per cent). All figures are adjusted for purchasing power changes, so exchange rates don’t factor in.
Martin Wolf refers me to this new paper by Paul De Grauwe, The Governance of a Fragile Europe. It very well argued and, I think, entirely convincing. Unless something is done, the prognosis for the eurozone is not good. Here is the abstract: Read more
European Union leaders agreed to set up a permanent bail-out mechanism for troubled eurozone economies after 2013. Lex’s John Authers and Vincent Boland discuss whether the measures can solve the problems facing the eurozone. Read more