Oct
22
Reuters reports that species of the blood-sucking insects that can carry
exotic-sounding tropical infections like malaria, West Nile Virus,
chikungunya and dengue fever are enjoying the extra bit of warmth climate
change is bringing to parts of southern Europe.
And with austerity budgets, a collapsing health system, political infighting
and rising xenophobia all conspiring to allow pest and disease control
measures here to slip through the net, the mosquitoes are biting back.
You have been warned.
13.52 It’s looking likley that a deal will be reached between Greece
and its creditors which will release the next tranche of its bailout,
thereby stopping the country from defaulting next month.
Simon O’Connor, a spokesman for EU Economy Commissioner Olli Rehn, said
in Brussels that an agreement was expected to be reached within days.
We are in the process of finishing with the Greek authorities the
technical work on the last fiscal and structural measures on which we have
to find agreement.
This should be possible in the coming days.
Greece needs the €31.5bn (£25.7bn) installment by mid-November to avoid
bankruptcy.
13.39 The Eurostat figures that were out earlier (see 11.26) are
bad news for Greece which has seen its debt to GDP for 2011estimated up to
170.6pc, from an estimate made in April of 165.3pc. The debt-laden country
has the higest debt-to-GDP of any of the 17-nation bloc.
It’s public deficit was also revised up, to an estimate of 9.4pc, up from
9.1pc.
12.45 Lunch time update on markets, which fell in early
trading but have picked up since then.
The FTSE 100 in London is up 0.2pc, the CAC is up 0.3pc in
Paris, as is the IBEX in Madrid and the DAX is flat in Berlin.
12.32 Spain’s banks should be fully capitalised by mid-2013, according
to the European Union’s anti-trust chief.
EU Competition Commissioner Joaquin Almunia said in the text of a speech to be
delivered at a conference in Barcelona, that EU EU regulators would clear
restructuring plans for nationalised lenders Bankia, Catalunya Caixa, Nova
Caixa Galicia and Banco de Valencia by the end of November.
Almunia also said he expected a recapitalisation plan from Banco Popular by
the end of this month.
The whole Spanish financial system will be fully capitalised by mid-2013 at
the latest
12.26 Germany appears to be refuting everything today.
German news agency DPA is reporting that German government spokesperson
Steffen Seibert has said Ireland won’t enjoy exceptions to the European
Stability Mechanism procedure, but said special circumstances are taken into
account.
He added Ireland does not enjoy “special status” in the support of its
banks.
Earlier today (see 08.59) Irish papers were reporting that Merkel had told
Ireland’s Taoiseach Enda Kenny that the country’s bank debt is a “special
case”.
11.58 Germany has NOT warned Britain that it will cancel
an EU summit n EU summit on the bloc’s long-term budget scheduled for next
month if David Cameron threatens to veto the vote, Reuters is reporting.
Earlier today (see 8.20) the FT reported (it was their splash) that Merkel did
not believe there is any point in holding the budget summit to agree on a
seven-year framework for EU spending if Britain vetos any deal other than a
total freeze on spending.
However, a spokesperson for Cameron said they had received no such warning and
added that Britain did not see the case for increases in spending above the
rate of inflation.
They haven’t, no, they haven’t said anything.
The prime minister set out his position on the budget on Friday in his
press conference. He’s made it clear he’s willing to do a deal on the budget
in November, so long as that is the right deal for British taxpayers.
The German government has also rejected the story in the FT.
“I unequivocally reject this report,” Steffen Seibert, Merkel’s chief
spokesman, told reporters at a regular government briefing in Berlin. “The
German government has an interest in the success of the special summit,”
since an agreement “would be a strong signal Europe could send out about its
ability to act.”
11.42 Germany’s central bank monthly report (see 10.30), aside
from from forecasting a sharp downturn in the country, has also said that
the ECB’s measures to support countries swept into the euro zone crisis
maelstrom are raising risks to the euro system’s balance sheet and
re-distributing them among taxpayers.
The more effectively monetary policy supports the financial systems of the
crisis countries with its measures, the more risks are transferred to the
balance sheet of the euro system and ultimately redistributed among all
taxpayers of member countries.
11.26 Looking through that Eurostat data (see 10.47) 17 members
of the EU had public deficits higher than the 3pc permitted by EU law in
2011. They were:
Ireland (-13.4pc), Greece and Spain (both -9.4pc), the United Kingdom
(-7.8pc), Slovenia (-6.4pc), Cyprus (-6.3pc), Lithuania and Romania (both
-5.5pc), France (-5.2pc), Poland (-5.0pc), Slovakia (-4.9pc), the
Netherlands (-4.5pc), Portugal (-4.4pc), Italy (-3.9pc), Belgium (-3.7pc),
Latvia (-3.4pc) and the Czech Republic (-3.3pc).
11.03 Another European Central Bank policymaker has backed German
Finance Minister Wolfgang Schaeuble’s idea for a eurozone commissioner with
power over member nations’ budgets and reform of European Parliament
decision-making.
Joerg Asmussen said on Monday it would be a “good idea” to have a
European Monetary Commissioner with special rights.
Yesterday fellow
ECB policymaker Klaas Knot
threw his support behind the German’s idea. The Dutch man, whoi heads
the Dutch Central Bank, said he “welcomed” the idea and said it
should be considered “carefully”.
Wolfgang Schaeuble has called for a eurozone commissioner with power over
European Union nations’ budgets.
10.47 The eurozone and European Union’s debt hit a high
in 2011, according to official figures out by Eurostat.
In the eurozone the government debt to GDP hit 87.3pc at the end of 2011, up
from 85.4pc at the end of 2010, while the EU hit 82.5pc, up from 80pc.
It’s not all doom and gloom though as the figures also showed that government
deficit in the eurozone and EU had decreased. In the EU it fell to 4.1pc in
2011, from 6.2pc in 2010 and in the EU it fell to 4.4pc, from 6.5pc.
10.30 The eurozone’s largest economy, Germany, has
published a report today saying that its economy will see a sharp slowdown
at the end of the year.
In the finance ministry report it said:
In the final quarter of 2012, growth is likely to slow substantially as
economic weakness in a number of eurozone countries puts the brakes on growth
The forecast is backed up the drop in investor sentiment, as seen in the fifth
consecutive monthly decrease in the ZEW’s monthly confidence index.
Germany notched up growth of 0.5 percent in the first quarter and 0.3 percent
in the second quarter.
Last week, the German government fractionally upgraded its growth forecast for
the current year to 0.8 percent, but slashed its prognosis for next year to
just 1.0 percent.
10.09 Meanwhile over in Greece, the prime minister
Antonis Samaras has expelled lawmaker Nikos Stavrogiannis from his
New Democracy party.
Stavrogiannis had told Greek weekly newspaper Real News that he would vote
against austerity measures that the government is preparing.
His departure is spurring speculation that the debt-laden nation is closer to
carrying out austerity measures.
09.50 Victory in Galicia for Rajoy’s austerity measures has helped
pushed the euro higher today. It is up 0.1pc at $1.3032 from a low of
$1.3013
Meanwhile, the yen has been pushed to a three-month low against the
dollar. The dollar rose around 0.4pc to 79.68 yen, its strongest since
mid-July, on expectations for more economic stimulus from the Bank of Japan.
Earlier today Japan posted its worst September trade figures in more than 30
years.
09.29 Yields on Spanish 10-year bonds have held steady following
the two regional elections (see 08.15).
Spanish 10-year bond yields weree 2.4 basis points higher at 5.4pc, having
fallen around half a point last week after Moody’s held its rating of the
country as investment grade.
Commenting on the win in Galicia for prime minster Mariano Rajoy, KBC
strategist Piet Lammens said:
[The election result was] slightly positive for Spanish bonds, because it
will give (Rajoy) more leeway to ask for a bailout.
If he had lost Galicia, he would have had more difficulties to sell such a
move to his party and the population.
Another regional election is scheduled in Catalonia on 25 November.
09.20 Last week the EU announced that its legal framework for a
eurozone banking regulator would be in place by the end of this year and
implemented during the course of 2014.
Well now Michel Barnier, the European commissioner in charge of
financial regulation, has said the European Commission will make a
proposal next year on introducing a joint agency for shoring up or closing
troubled banks.
He told reporters on monday that once the banking supervisor was in place,
Europe will then move on to plans for a body to tackle banks in difficulty.
“The second stage is a proposal in 2013 for a European resolution
agency,” he said, adding this would have broad legal powers and
work closely with national authorities.
08.59 Ireland is waking up to the news that Angela Merkel has
said that the country’s bank debt is a “special case”.
After a flurry of phone calls between Dublin and Berlin all weekend, Ireland’s
Taoiseach Enda Kenny and German Chancellor Merkel issued a joint statement:
The Taoiseach Enda Kenny and Chancellor Angela Merkel spoke together this
afternoon…They discussed the unique circumstances behind Ireland’s banking
and sovereign debt crisis, and Ireland’s plans for a full return to the
markets.
In this regard they reaffirmed the commitment from June 29th to task the
Eurogroup to examine the situation of the Irish financial sector with a view
to further improving the sustainability of the well performing adjustment
programme.
They recognise in this context, that Ireland is a special case, and that
the Eurogroup will take that into account.
It also comes as Mr Kenny travels to Paris in a bid to get President
Hollande’s support for more favourable terms on the mountain of debt.
Ms Merkel agreed there were “unique circumstances” behind Ireland’s
bank and state debt crisis and said measures to ease the debt burden would
be examined.
The joint statement does not bring a bank deal tangibly closer, but Ireland
will view it as strengthening its position.
08.40 Some 6,000 miles away Japan has posted its worst September
trade figures in more than 30 year.
Official data showed on Monday, that the world’s third-largest economy has
been struggling to turn around its fortunes following the March 2011
earthquake and tsunami disaster, while also suffering from Europe’s debt
crisis, slowing Chinese demand and the strong yen
08.30 Markets are not having a good Monday morning so far.
The FTSE 100 and DAX are down 0.2pc in early trading, and the CAC
is down 0.3pc.
08.20 The FT is reporting that Germany is planning to warn Britain
that it will seek to cancel next month’s European budget summit if David
Cameron, the prime minister, insists that he will veto any deal other
than a total freeze on spending.
Germany’s chancellor Angela Merkel does not believe there is any
point in holding the budget summit to agree on a seven-year framework for EU
spending if Britain intends to veto any deal, say people close to the
negotiations.
08.15 On Sunday, there were two regional elections in Spain.
Spain’s ruling conservative party has held on to control in regional elections
in Galicia, giving a boost to Prime Minister Mariano Rajoy as he pushes on
with tough austerity measures, even as nationalist parties triumphed in the
Basque Country.
The elections in two of Spain’s 17 autonomous regions on Sunday were seen as
the first real test for Mr Rajoy’s Popular Party after ten months in power
that have seen a deeply unpopular programme of public spending cuts and tax
hikes.
08.11 Good morning and welcome back to our live coverage of the
eurozone debt crisis.
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