One of this morning’s reports from the EU summit is headlined – “David Cameron fails to cut EU bureaucrats pay and perks“. With the EU budget talks collapsing on Friday afternoon, it appears to be true, at least for now. And it’s a great shame. I know that sentiment will deeply irritate my friends in the EU bureaucracy – some of whom have been emailing me to point out that spending on administration is a mere €6bn a year, which is less than 6% of total EU spending. Even so, there is plenty of waste in the EU budget that could be easily sliced away.
What is true is that one element of Cameron’s approach – which is to suggest a 10% cut in the budget for pay – is potentially too crude. Not all EU operatives are overpaid. Some of the lawyers, for example, have relatively modest salaries by private-sector standards. Rather than an across-the-board cut in pay it would be much more productive to start eliminating entire agencies, functions and perks. This would cut the payroll and the budget, while preserving the bits of the EU that actually do something useful. Here are some candidates for the chop. Read more
Add Poland to the list of European Union countries turned off by the incoherent, self-isolating policies of Britain’s Conservative-led government towards Europe.
First there was Germany. Chancellor Angela Merkel restricts her visits to the UK these days to the barest minimum. She has been lukewarm about David Cameron, the UK prime minister, ever since he pulled the Conservative party out of the pan-European centre-right European People’s Party (EPP), of which her Christian Democrats are a leading light.
Next came France. President François Hollande hasn’t forgotten how Cameron refused to meet him when he visited London on an election campaign trip earlier this year. Hollande is not inclined to do Cameron any favours on crucial issues such as the protection of British interests in a more deeply integrated Europe. Read more
Welcome to our rolling coverage of the eurozone crisis. German judges have ruled in favour of the eurozone’s rescue plans – albeit with conditions, Dutch voters are going to the polls and Brussels publishes plans for eurozone-wide banking supervision. By Tom Burgis, John Aglionby and Ruona Agbroko on the London newsdesk with contributions by FT correspondents around the world. All times are BST.
16.51 That’s a wrap for our live coverage of a big day in the eurozone. The message of the past week seems to be: all hail the ECB. See ft.com for more news and analysis through the evening. We leave you with a last summary of the market mood from Ralph Atkins, the FT’s capital markets editor.
Markets have reacted positively to today’s news but it had largely been priced-in – the party took place last week. Spanish 10 year bond yields which have fallen by some 200 basis points since late July dropped a further six points. Spanish two year bonds were down 10 basis points. Shares rose initially, but the FTSE Eurofirst 300 index is closing more or less unchanged at 1108.0.
16.26 In Frankfurt, FT bureau chief and eurozone economics guru Michael Steen has been assessing the impact for the ECB of moving into the murky world of banking regulation.
By taking on oversight of eurozone bank supervision, the ECB can at best hope to prevent situations arising in which a bank needs to be bailed out and its depositors repaid. But, as people inside the ECB have themselves acknowledged, supervision is very far removed from the intellectual world of setting interest rates.
“When you deal with banks, you deal with politics. Automatically,” one senior ECB official said. “It’s very dangerous.”
The full piece is coming soon to ft.com/europe Read more
José Manuel Barroso (R), who is set to unveil plans for a "banking union" on September 12, shown here in talks with German Chancellor Angela Merkel in June.
In times of crisis, a fast-forward button can be pressed on decisions that would usually take years of discussion and planning. So it is with the creation of a European ‘banking union’, which analysts at the Bruegel thinktank describe as an endeavour “in some respects no less ambitious and complex than the creation of monetary union itself”. The aim is to brace eurozone banks against future shocks by bringing them under a common regulatory and supervisory structure, introducing common deposit insurance and a shared system for crisis resolution. In June, José Manuel Barroso, president of the European Commission, told the FT he’d like to enact a banking union as soon as 2013. But is that really feasible? And what hurdles stand in the way? Read more
While it must be tempting for Cameron to score cheap points off the French government and to lecture the Germans, it is also distinctly ill-advised, argues Gideon Rachman Read more
Angela Merkel’s speech to parliament in Berlin today marks a distinct shift in tone, argues Gideon Rachman. Read more
Spain’s prime minister Mariano Rajoy, speaking in parliament today [our emphasis]:
“The next European Council on June 28 and 29 must launch a clear and decisive message on the irrevocability of the euro and the single market.”
But this is what Angela Merkel had to say last week, according to Spiegel.de:
“I don’t think that there is a single summit at which the big design will appear,” she said on ARD.
Which way forward? Photo: Getty
Welcome to our first eurozone live blog of 2012. By John Aglionby, Tom Burgis and Esther Bintliff on the news desk in London with contributions from correspondents around the world. All times are GMT.
It may be a new year but it’s the same old eurozone crisis. French President Nicolas Sarkozy and German Chancellor Angela Merkel held a bilateral summit in Berlin this morning. Read more
Welcome back to our live coverage of the eurozone crisis. By Tom Burgis and Kimiko de Freytas-Tamura on the newsdesk in London, with contributions from FT correspondents around the world. All times are GMT.
A summit in Brussels ended in deep division, with the UK refusing to back a new treaty for all 27 EU members and leaving the eurozone countries plus at least six others to forge ahead with a pact of their own to enshrine strict new rules on deficits and debt. It was meant to be the summit that would decisively chart a course out of the eurozone’s debt crisis.
19.03 That’s the end of our live coverage today. We’ll leave you with a quick summary of the day’s developments. See FT.com for more news and analysis through the evening.
- The European Union’s 27 leaders, minus David Cameron, struck a deal in the early hours to draw up a treaty by March that would bind them to strict new rules on debt and deficits, with automatic sanctions for countries that break them
- The UK courted isolation as it refused to sign up to a treaty for all 27 members after David Cameron’s early-hours pitch for safeguards to protect UK financial services met a chilly reception from his counterparts
- Markets were volatile before a tentative rally lifted equities in Europe and the US. The euro strengthened against the dollar but yields on Italian and Spanish bonds climbed once again
- The IMF welcomed the European deal, which included €200bn for the fund to ensure it has enough cash to deal with any more fallout from the eurozone crisis, with Christine Lagarde, its head, saying she was “hopeful that others will also do their part”
Welcome back to our live coverage of the eurozone crisis. By Tom Burgis, Esther Bintliff and Kimiko de Freytas-Tamura on the newsdesk in London, with contributions from FT correspondents around the world. All times are GMT.
Europe’s leaders gathered in Brussels for another crunch summit. Expectations are running high for a new grand bargain to restore sanity to the eurozone’s finances and chart a course out of the debt crisis. Also today:
- The European Central Bank cut interest rates by a quarter point to 1 per cent, as expected, and announced that it would accept more forms of collateral and offer longer-term loans to try to protect the banking system
- Mario Draghi, ECB president, poured cold water on hopes the central bank was poised to take more aggressive action
- The European banking authority unveiled its updated stress tests of 70 banks, which tripled the capital shortfall for the German banking sector and pushed up the Europe-wide deficit from €106bn in October to €115bn now
20:15: We’re winding up the liveblog for tonight, but you can follow the rest of the action at FT.com and we’ll be back again on Friday morning. Thanks for reading and for all the comments. Bon courage!
19.54: BREAKING – Peter Spiegel, the FT’s Brussels bureau chief, has this scoop from the summit:
EU leaders have begun their late-starting summit, and they were given a 6-page draft of their conclusions at the start. According to people who have seen it, some of the most interesting new language is on the eurozone bail-out funds.
The current version says the existing €440bn fund, the EFSF, will continue running for another 2 years financing its current programmes – which would not be transferred to the new fund, the €500bn ESM.
That would free up the ESM’s resources, giving the eurozone significantly more firepower, with the two funds running in parallel.
The conclusions say the ESM would have its maximum €500bn lending capacity, regardless of how much the EFSF is committed to.
That could mean as much as €200bn in new “bazooka” weaponry.
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