Open Europe press summary: 21 January 2009

Europe

ECJ rules that employees on long term sick leave are entitled to full holiday pay
The Mail reports that the European Court of Justice has ruled that employees on long-term sick leave are still entitled to paid holiday. It means that staff can take their annual leave built up while off sick as soon as they return to work. In addition, any worker who is sacked or who leaves a firm while off ill must be financially compensated for the holidays not taken. EUobserver notes that the Court based its decision on a clause in the EU's Working Time Directive that states that employees have the "right to a minimum period of paid annual leave."

The Mail notes that critics have said the judgment will impose yet more burdens on hard-pressed businesses already struggling in the recession. It quotes Katja Hall, Director of Human Resources Policy at the CBI saying "This is a real blow to firms trying to keep jobs alive." David Frost, Director-General of the British Chambers of Commerce, said the ruling defied logic: "Companies will either be left with the burdensome task of reallocating resources while the accrued holiday is being taken, or will face a large one-off expense which will damage their cash flow," he said.
Mirror Mail EUobserver

Treasury Minister: Errors in EU budget "entirely unacceptable"
PA reports that Ian Pearson, the Treasury's Economic Secretary, has said that the European Union's inability to get its accounts in order is "entirely unacceptable". Speaking in a Commons debate on financial management of the EU budget, Mr Pearson said: "It is simply not good enough that the majority of the EU budget suffers from a level of error that is material." He added, "I want to be clear from the outset that the Government considers the situation to be entirely unacceptable."

Conservative MP Phillip Davies said, "Surely the problem is that the UK Government, each year that the accounts aren't signed off, the following year gives even more money to the EU... the answer is for the UK Government to say 'we won't give you any more money until you get your accounts signed off properly'."

Mr Pearson responded, saying that although the management of the budget had improved, "I certainly agree EU taxpayers deserve better." Mr Pearson said it was "not realistic" for Britain to stop making payments to the EU as some had suggested, but he told MPs "We do need to be relentlessly dissatisfied with the progress that has been made on these issues."
Hansard

EU Finance Ministers approve further stimulus measures as fear of markets' willingness to finance borrowing grows
At a meeting of EU Finance Ministers yesterday, all member states agreed with a statement prepared by the Czech Presidency, saying that "the coordinated fiscal stimulus will thus be followed by a coordinated budget consolidation". The WSJ qualifies this as a "warning that they are running out of room to spend money to boost their economies", while Czech Finance Minister Miroslav Kalousek is quoted by the IHT denying discussions on a possible "phase two" fiscal stimulus, saying "there are limits to the amount of borrowing that can take place. It's also a question of how long the markets are willing to finance such borrowing."

De Telegraaf reports that, "Germany seems to have given up strict application of the stability and growth pact, leaving the Netherlands isolated in its commitment to it."

German Finance Minister Peer Steinbrück expressed fears about the situation in Britain, which is forecast to have a 9.5% budget deficit next year, as well as in Ireland, whose deficit in 2010 is put at 13%. Although British Chancellor Alistair Darling insisted he had won backing in Brussels for the bail-out, the German Finance Minister said he did not understand Darling's scheme to insure UK banks' multibillion-pound toxic assets via the Bank of England.
FT Irish Times IHT Telegraph: Waterfield blog European Voice Telegraaf WSJ Guardian Guardian: Pratley EUbusiness Irish Independent

Germany rejects common issuance of debt by eurozone governments;
Almunia rejects talk of a split in the eurozone
FT Deutschland reports that Germany's Finance Minister Peer Steinbruck yesterday rejected proposals supported by Italy and some other European countries in favour of the common issuance of debt by eurozone governments, saying "I will not accept any deterioration in Germany's financing conditions". The newspaper writes that the plan to counter intra-eurozone tensions is now therefore dead.

Commenting on whether the Euro was a mistake, economist Barry Eichengreen writes on the Vox website, "The euro area will hang together, in other words, because the decision to enter is essentially irreversible. Getting out is impossible without precipitating the most serious imaginable financial crisis - something that no government is prepared to risk."

EU Commissioner for Economic and Monetary Affairs Joaquin Almunia has rejected any suggestion of a split of the eurozone. Le Monde notes that the current economic crisis is however putting the monetary union under severe strain and that certain states are asking for lower rates of borrowing than those currently in place. The paper highlights that this growing and persistent pressure could bring about the eventual demise of the monetary union.
Le Monde FTD Le Monde Vox

Private Eye's 'Brussels Sprouts' column notes that, while a million EU voters supported ending the European Parliament's second seat in Strasbourg, only 268 out of 785 MEPs followed suit. The article mentions Open Europe's campaign to put pressure on MEPs to end the wasteful monthly trips from Brussels to Strasbourg.
Open Europe blog

Voters uninterested in EU elections
A new Eurobarometer poll commissioned by the European Parliament has found that interest in the upcoming European elections in June is limited, suggesting voter turnout will be low, according to a report on EurActiv. Only 34 percent of respondents had a "positive image" of the EU Parliament, down 5 percent since 2007.
EurActiv Eurobarometer

Commission proposes more funds for dairy farmers
European Voice reports that the European Commission is set to follow up recent increases in subsidies with a proposal to use unspent funds in helping dairy farmers. The article notes that, last week the Commission re-introduced export subsidies for milk, butter and cheese as short-term measures to support the sector. However, the new proposals would see some of the 1.5 billion euros that remain unspent in the Common Agriculture Policy being channelled towards dairy farmers, who are currently being hurt by low prices for milk, cheese and other products.
European Voice

Calls in Europe for end to "bonus culture"
Le Monde highlights the growing sense of agreement amongst EU decision-makers that the "bonus culture" which existed in the financial world should come to an end. Jean-Claude Trichet, head of the ECB, has added his voice to Nicolas Sarkozy and Christine Lagarde's, French Minister of Finance, in asking for an end to bonuses for bankers.

According to Le Figaro, French President Sarkozy, who had asked for "a moralisation of capitalism", has now threatened banks which hand out bonuses that are too generous, since "employees will have to face the economic crisis without any rise in their purchasing power." The newspaper notes that Sarkozy is prepared to suspend any state aid for banks that do not end variable salaries.
Monde Le Figaro

Private Eye: EU's carbon trading scheme to offer windfall profits to biggest polluters
Private Eye's 'Brussels Sprouts' column argues that EU leaders' 'historic' climate change deal agreed at the end of last year will in fact yield "historic" windfall profits for Europe's biggest polluters. The windfall will be generated by the EU's Emissions Trading Scheme (ETS), which the article notes has over allocated free permits to heavy industry. In the steel sector, for example, falling demand due to the economic downturn has left steel companies with a surplus of free permits which they can sell for a profit in the next phase of the scheme.

The article also notes that, on the other hand, power companies have been given less generous allowances. But as they must go to market to make up the shortfall, they pass on their increased costs to consumers, meaning they won't lose out either.
Open Europe research

The news website City Wire's blog features Open Europe's recent research on the EU's communication policy.
City Wire blog The hard sell: EU communication policy and the battle for hearts and minds

Polish President will not sign Lisbon Treaty until second Irish referendum
EUobserver reports that the Polish President Lech Kaczynski has said that Poland will not sign up to the Lisbon Treaty until after the second Irish referendum. Kaczynski went on to say that he would only sign the Treaty if the Irish voted 'Yes', "In Ireland, the constitution requires a referendum and in a referendum, the majority voted against the Lisbon Treaty."
EUobserver

Russian gas reached the European Union yesterday for the first time in almost two weeks, marking the end to a dispute that left most of Eastern Europe without supplies during a bitterly cold spell.
WSJ Guardian Mail EUobserver Irish Times IHT IHT 2 Telegraph BBC European Voice EurActiv

Planning problems blight the wind power industry
At a 'green summit' in Abu Dhabi, energy experts have forecast that "One million people will be employed in the world wind-power industry by the end of the decade, despite the impact of the financial crisis." However, Frank Mastiaux, Head of Climate and Renewables at E.ON, has warned that planning problems continue to blight the wind power industry, claiming that only one in five projects put forward for eastern Europe ended up being built. The EU has committed itself to sourcing 20% of its energy from renewable sources by 2020.
Guardian

Volkskrant looks forward to what the new US President, Barack Obama, will bring for the EU, citing in particular likely requests to the Netherlands and Germany to send more troops to Afghanistan. Also likely is a request to accept some of the 255 remaining Guantanamo prisoners.
Volkskrant

In an interview with the FT, Liberal Democrat leader Nick Clegg argues that joining the Euro could be an "anchor" against the "incredibly vulnerable exposure to international financial markets". The paper notes that Clegg's enthusiasm for the Euro could be a problem for the party in the run-up to European elections in June.
FT

The representation of Bulgaria as a Turkish toilet on the controversial sculpture commissioned by the Czech Presidency has been covered up, following protests from Bulgaria.
Irish Times BBC Times Le Monde

The French Agriculture Minister says France and the European Commission will appeal against a U.S. move to triple U.S. import duties on Roquefort cheese in the World Trade Organisation, while a French MP proposed to raise duties on Coca Cola.
AFP TF1 Figaro

Chinese Premier Wen Jiabao will visit Europe next week but the trip will exclude France, in response to President Nicolas Sarkozy's meeting with the Dalai Lama last year.
Echos BBC

UK

Labour MPs to face three-line whip on public scrutiny
The Telegraph reports that Labour MPs will be subject to a three-line whip on a vote tomorrow to withhold details of their expenses from publication. According to the article, votes on the workings of Parliament are normally subject to a free vote.
Telegraph Mail: Brogan blog Times Mail

A leader in the FT says that Ken Clarke's return to the Shadow Cabinet is a "welcome move" and that "realism is also on display in the agreement to disagree on Europe."
FT: Leader Guardian: Harris

Open Europe is an independent think tank campaigning for radical reform of the EU. For information on our research, events and other activities, please visit our website: www.openeurope.org.uk or call us on 0207 197 2333.