EUROPE’S ECONOMIC TROUBLES WORRY GLOBAL PARTNERS
Recent troubles in stock markets in Europe are having repercussions around the world, raising fears that the economic downturn may be prolonged. Shocks in European stock markets have spread to the US and Asia, where stock markets have slumped as investors are growing uncertain about Europe’s recovery. Some EU member states are struggling to pay off large debts and some risk to default on their debts, prolonging the economic downturn and even raising concerns on the EU currency union. As the EU tries to put pressure on its members to discipline their finances, investors are wondering whether stronger economies in Europe will come to the rescue of the weaker ones, or whether these will be allowed to default with major repercussions for financial markets worldwide. The current fiscal troubles began in Greece, which has failed to curb its excessive public spending and finds itself burdened by large budget deficits and public debt. Europe’s politicians and global investors now worry about other EU countries with large debt and deficits, including Spain, Portugal and Ireland.
EU LEADERS SEEKING COMMON 2020 vision
European governments are working to find common ground regarding the EU 2020 strategy, the successor to the Lisbon agenda aimed at creating growth and jobs and improving the competitiveness of the EU. EU leaders are under pressure to provide a strong message at the informal Summit taking place on 11 February and to find a solid deal on a roadmap to growth and competitiveness, especially in times of economic and financial woes. However, differences amongst the EU governments’ positions are already emerging. France asked for emphasis to be put on creating employment through greater coherence between EU policies and called for a new industrial policy. Other countries, such as the UK and Poland, urged to focus on innovation and research and to protect small businesses, while the Czech government warned against broadening the scope of the strategy, urging governments to focus on growth and jobs. EU leaders will also have to take into consideration the negative views expressed by social and environmental NGOs, which have criticised the narrow scope of the European Commission’s draft strategy, which focuses only on the competitiveness of industry, while remaining vague on the social and environmental agenda.
EU PUSHES FOR CENTRALISED CARBON AUCTIONING
The European Commission is expected to propose rules for the auctioning of carbon allowances as of 2013 in the next few weeks, as required by the Emission Trading Scheme Directive (ETS), revised in 2009. The auctioning rules are to be prepared by the Commission, then submitted to a committee of experts representing all member states. If approved, the rules are then submitted to the European Parliament for scrutiny for a three months period ahead of final adoption in June 2010, the deadline set by the ETS Directive. The Commission’s proposal is expected to establish a centralised auctioning system, despite the opposition of the UK, Germany, Poland and Spain, which are instead in favour of a system run at national level. Industry players are calling for a swift agreement, saying that a delay would create uncertainty and have negative consequences for ETS installations.
DATA EXCHANGE DEAL WORRIES EUROPEAN PARLIAMENT
The European Parliament looks set to reject an interim deal, which has been provisionally signed by all 27 EU justice ministers, under which the US would be allowed to access to information about bank transfers within Europe gathered by the Society for Worldwide Interbank Financial Telecommunication (SWIFT). Several parliamentarians are concerned about privacy and data protection and call for a new, permanent deal to be negotiated with the US. However, political groups remain divided over the issue and the fate of the deal is by no means certain. The US warns that refusing to accept the deal would seriously hamper anti-terrorism activities. The US had access to SWIFT transfer data since the 9/11 attacks, but a decision by SWIFT to move key computer servers from the US to Europe as of January 2010 means that the EU must authorise access. SWIFT confirmed that it stopped automatic transmission of the data and has received no court orders to provide data to the authorities. Data protection is an ongoing issue troubling EU-US relations: similar disagreements have already emerged as regards airline passengers data records.
COMING UP NEXT WEEK
· 8-11 February: European Parliament Plenary, Strasbourg. Agenda: vote on the new European Commission, Lisbon Treaty rules and parliamentary procedures.
· 11 February: Informal EU Summit, Brussels. Agenda: economic recovery, climate change, Haiti.
Karl Isaksson, Managing Partner Brussels, Kreab Gavin Anderson
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