New Open Europe study: EU alternative investment Directive to cost industry and investors billions
The FT reports on a new Open Europe study, published today, on the EU's proposed Alternative Investment Fund Managers (AIFM) Directive. The report is based on two surveys of BVCA members (private equity managers) and AIMA members (hedge fund managers). In total, the survey respondents manage over 545 billion worth of assets worldwide, making this the most comprehensive study to date on the proposed Directive.
The study finds that the hedge fund and private equity sectors contributed around 9 billion (£7.9 billion) in tax revenues to the EU economy in 2008. This is enough to fund almost all the subsidies that France receives every year from the EU's Common Agricultural Policy. 6.1 billion (£5.3 billion) of this amount was raised in the UK - enough to pay for over 200,000 nurses or 165,000 teachers. The tax revenues generated over two years by AIFMs in the UK could pay for the entire 2012 London Olympics.
Open Europe's surveys reveal that unless a range of amendments take place, the AIFM Directive will impose substantial costs on the alternative investment industry, without offering sufficient benefits for the industry, investors and the wider economy. In total, the Directive could cost the private equity and hedge fund sectors in the EU between 1.3 billion and 1.9 billion (£1.2 billion and £1.6 billion) in the first year, in compliance costs alone. The annual recurring cost is estimated at between 689 million and 985 million (£597 million and £853 million). Much of this cost is expected to be passed on to investors.
At the same time, the surveys find that the ability of European investors to choose freely from amongst the best funds and managers could be cut by up to 80 percent and managers' ability to deliver returns for their investors could in some cases be reduced by as much as 5-10 percent. Taken together, this would make European investors billions of euros poorer - a cost which will be passed on to individual savers and pensioners. Although better protection for investors is one of the main objectives of the Directive, the survey shows that only 2 percent of managers' clients are in favour of the draft Directive. 46 percent of clients oppose it.
The report concludes that although better supervision and regulation is needed for the hedge fund and private equity sector, the proposed Directive is overly burdensome, protectionist and could even prove counterproductive for some of the stated aims of the Directive, such as preventing market abuse and excessive risk-taking. The Directive could also have a negative impact on the economy as a whole. Open Europe's Mats Persson is quoted by Bloomberg saying that in a worst case scenario, "Thousands of jobs and millions of pounds in tax revenues could be at stake."
Based on the surveys, Open Europe sets out a number of recommendations which it argues would radically reduce the negative impact of the draft Directive, while keeping the benefits of the proposal intact.
Meanwhile, John Chapman, a former senior official at the Office of Fair Trading, argues in the FT that the AIFM Directive "must go further, and be followed by taxation to eliminate socially undesirable hedge fund and private equity activities."
FT FT-Alphaville Bloomberg EurActiv FT: Chapman FT Advisor Global Investor Open Europe research Open Europe press release
EU funding "Orwellian" surveillance technologies and plans to create "common culture" of law enforcement
The Sunday Telegraph reported on Open Europe research which found that the EU is spending millions of pounds developing "Orwellian" technologies designed to scour the internet and CCTV images for "abnormal behaviour".
A five-year research programme, called Project Indect, which received nearly £10 million in funding from the EU, aims to develop computer programmes which act as "agents" to monitor and process information from web sites, discussion forums, file servers, peer-to-peer networks and even individual computers. Its main objectives include the "automatic detection of threats and abnormal behaviour or violence".
The paper noted that Open Europe's research suggests that intelligence gathered by Indect and other such systems could be used by a little-known body, the EU Joint Situation Centre (SitCen). The article quoted Open Europe's research saying, "An increased role for SitCen should be of concern since the body is shrouded in so much secrecy. The expansion of what is effectively the beginning of an EU 'secret service' raises fundamental questions of political oversight in the member states."
Open Europe's Stephen Booth was quoted saying, "This is all pretty scary stuff in my book. These projects would involve a huge invasion of privacy and citizens need to ask themselves whether the EU should be spending their taxes on them. The EU lacks sufficient checks and balances and there is no evidence that anyone has ever asked 'is this actually in the best interests of our citizens?'"
The article also noted that the European Commission is calling for a "common culture" of law enforcement to be developed across the EU and for a third of police officers - more than 50,000 in the UK alone - to be given training in European affairs within the next five years. The EU's budget line for justice and home affairs is set to increase by 13.5 percent to nearly £900 million, the biggest percentage increase of any EU budget area.
Sunday Telegraph Inquisitr
New poll shows 70% of voters want a referendum on Lisbon, even if it is already in force;
Open Europe: Cameron should use EU budget negotiations to hold a "referendum on reform"
A new ICM poll for the Sunday Telegraph has found that 70 percent of voters want a Conservative government to hold a referendum on the Lisbon Treaty, even if it is already in force when they come to power. Even most voters who say they identify most closely with Labour (64 percent) want the Conservatives to offer a referendum if they win power.
The poll also found that 40 percent want Britain to leave the EU altogether, compared with 55 percent who want to remain in the EU. 58 percent say more decisions should be taken by individual EU member states rather than by the union as a whole, with 24 percent saying the current decision-making process was about right, while only 14 percent wanted more decisions taken in Brussels. Asked which out of four countries did best from the EU, 43 percent of voters chose France, while 25 percent picked Germany. Just 10 percent thought Britain got the best deal of the four, with Italy trailing on eight percent.
Meanwhile, in a piece for the Conservative Home website yesterday, Open Europe's Lorraine Mullally argued that, while the Conservatives seem unwilling to hold a referendum on Lisbon if it is already in force by the time they come to power, they must hold a "referendum on reform." Lorraine argued that: "finally consulting the people would shatter the permissive consensus among the political class which has allowed the continual erosion of our democracy", arguing that the Conservatives should use the EU budget negotiations as a lever for radical reform. She said: "Cameron has said that he wants, as just one example, to bring back bits of policy to the national level, such as social and employment policy. That will require the agreement of 26 other member states. But that doesn't make it impossible. We should link demands for reform to the EU budget - and link that to a referendum."
Sunday Telegraph Conservative Home
Former Labour Minister blasts Lisbon Treaty
Saturday's Mail and the Sunday Telegraph reported on comments made by Gisela Stuart, Labour MP and former minister, at an event held by Open Europe on the Lisbon Treaty, in Dublin on 9 September. The comments are also picked up today by William Rees-Mogg in the Times. Gisela said "My basic test of democracy is: can I get rid of them? By casting a vote, you can change the people who are in control of you... Lisbon does not give you, as a citizen, the means to control the executive or the politicians who decide on your behalf, and that's the hurdle it falls on....The nature of democracy is really at stake." She also warned there would be "no more treaties, no more referendums anywhere" on EU integration. The paper noted that "Miss Stuart is a pro-European who sat on the committee which drew up the original EU Constitution, later repackaged as the Lisbon Treaty." Gisela was speaking alongside several other speakers from around Europe, who also argued that the Lisbon Treaty would be bad for democracy.
Mail Sunday Telegraph Times: Rees-Mogg OE transcript OE blog
Estonian economy in a "vicious circle"
Ambrose Evans-Pritchard in the Telegraph reports on the planned Estonian austerity package to keep the budget deficit below the EMU ceiling of 3 percent of GDP. He also reports the reaction of Professor Ülo Ennuste from Tallinn University, who, when talking at an Open Europe debate in Tallinn last week, described the policy of the government as "absolutely mad", saying "we're in a vicious circle where thousands more lose their jobs and don't pay taxes, so there have to be more cuts. We need fiscal relief packages at once. This makes nobody happy but the Kremlin."
Telegraph: Evans-Pritchard Open Europe events
Barroso announces 14.8 million in assistance for Ireland, while campaigning for Yes vote on Lisbon Treaty;
Professor Ray Kinsella: "We shouldn't be frightened of a No vote"
European Commission President Jose Manuel Barroso travelled to Ireland at the weekend to campaign for a Yes vote in the second Lisbon Treaty referendum on 2 October. Saturday's Irish Independent reported that, while in Ireland, President Barroso announced that the European Commission had approved a grant of 14.8 million to help over 2,000 former Dell workers find work under new EU crisis measures. The People's Movement described the announcement as a "cleverly timed stunt".
Appearing on RTE radio, Professor Ray Kinsella, of University College Dublin's Smurfit Business School, dismissed claims that a No vote would have a negative impact on Ireland's public finances. "The cost of our borrowing going forward does not depend on our voting Yes or No. It certainly doesn't depend on us voting No," he said. He added, "I don't think we should be frightened of a No vote."
The Irish Times reports that 63 percent of voters now say they have some understanding of the Lisbon Treaty, a rise of just 3 percent since the last survey conducted in July for the Referendum Commission. However, nine out of 10 voters now say they are likely to vote according to the behaviour and attitudes survey of 500 voters, conducted a week ago. The Sunday Times reported that a new Millward Brown IMS poll shows that 53 percent of people are planning to vote in favour of the Treaty, with 26 percent against.
Meanwhile, in a press statement, Libertas founder Declan Ganley said that UKIP should leave the debate in Ireland, and that the intervention of the party was "every bit as unwelcome as the parade of Brussels mandarins that will be wheeled out over the coming weeks to lecture the Irish people".
Mary Ellen Synon comments in the Irish Mail that "Earlier this year, the chances of Mr Blair taking the new post of permanent president were weakening. But the re-election last week...of Jose Manuel Barroso as president of the European Commission may have secured the job for the former British prime minister."
The Mail on Sunday reported on Adam Boulton's new book, which says: "By propping up Mr Brown, Lord Mandelson has delayed the Election - and quite possibly facilitated the ratification of the [Lisbon] treaty. This will doubtless endear him to EU leaders, who in turn might look all the more favourably on choosing Mr Blair as their President."
Mail on Sunday Mail: Glover RTE radio Irish Times Irish Times 2 Irish Times 3 Irish Times 4 Irish Times 5 Times Irish Times: Leader Irish Times 6 Irish Times 7 Irish Independent Irish Times 8 EurActiv Times 2 Irish Times 9 EUobserver Irish Independent 2 Irish Times 10 Irish Times 11 Irish Independent 3 Irish Times 12 Irish Times 13 Sunday Times Sunday Times 2 Irish Times 14 Irish Times 15 Irish Times 16 Coulisses de Bruxelles
EU states already debating how to "nudge" Czechs to ratify Treaty as soon as possible
An article in the Telegraph has a headline which reads, "Czech delay could mean British referendum on Lisbon Treaty", and reports that senior diplomats said that President Nicolas Sarkozy erupted with 'fury' after Czech PM Jan Fischer raised the prospect of a long delay in ratifying the Treaty if another complaint is filed with the Czech Constitutional Court. It also reported that Shadow Foreign Secretary William Hague has privately described Europe as the "ticking time bomb" under Mr Cameron's leadership.
Saturday's Irish Times reported that EU sources have confirmed that a debate has already begun between EU states on the best way to "nudge" Mr Klaus and the Czech government to ratify the Treaty as soon as possible, in the event of a Yes vote in Ireland.
AFP reports that a new Constitutional complaint against the Treaty will be filed on 29 September in the Czech Republic. Senator Jiri Oberfalzer is quoted saying: "I think that the Court can do the same thing as the German Constitutional Court", which demanded more powers for the German Parliament in EU decision making.
Polish newspaper Dziennik reports that Polish President Lech Kaczy?ski will sign the Treaty on the 2 October if results of Irish referendum are "obvious", according to European Parliament President Jerzy Buzek.
Dziennik AFP Telegraph Telegraph: Leader Times EurActiv
£280 million on new EU building for EU President and "Foreign Minister"
The Telegraph reports on plans for the new EU building which is set to cost EU taxpayers £280 million. The building will house the offices of the new EU President, "foreign minister" and European diplomatic service, if the Lisbon Treaty is ratified. The Telegraph reports that EU buildings currently occupy a total of 1.9 million sq metres of office space in Brussels, over half of which is occupied by the Commission, which spent £185 million on its offices in 2008. The cost of the new building has already risen by £66.5 million since planning began.
German government criticises EU financial oversight plans for "undermining" national institutions
The FTDeutschland reports that the German government has criticised plans for a pan-EU system of financial supervision because "a binding EU authority would undermine the competences of national controlling institutions".
FTD Focus Manager Magazin
Fears UK will lose out on £2bn Galileo contracts, despite £1bn contribution
The Observer reported that in three months the European Commission will unveil which companies will build, operate and maintain 26 new satellites for the EU's Galileo satellite navigation project, with £2bn worth of contracts up for grabs. There are concerns that the booming British space industry will miss out as countries like Germany and France pump hundreds of millions of euros into building new launch centres. The Commission says all participating firms must be European, but some British firms are concerned that lobbying from France and Germany in particular will see their firms triumph when contracts are announced in December. And they fear that continental Europe subsidies its space industry so lavishly that it will bring down bid costs, which could work against UK firms, even though the UK is contributing more than £1bn to the project.
Slovak manufacturer files for bankruptcy after being hit by EU competition fine
The Weekend FT reported that one of the largest chemicals manufacturers in Slovakia has filed for protection from its creditors just weeks after a 19.5m fine was imposed by the European Commission for a breach of competition law.
EurActiv reports that EU Commission President, José Manuel Barroso, wants to put the "Better Regulation" agenda directly under his authority. The responsibility currently rests with the Enterprise Commissioner.
EurActiv OE Research
In a letter to Saturday's Telegraph about how EU laws are made, Lord Pearson of Rannoch argued that "British Governments have promised for many years that they won't agree to any new law in the Council which is still being "scrutinised" (that's all we can do) in the select committee of either House of Parliament. But they have broken that promise 435 times in the last six years."
In the Sunday Times, Charles Clover argued that the European Court of Justice "now appears to be undermining democracy, accountability, and, yes, rule of law." He says: "There is virtually no other jurisdiction in the world where the decisions of unelected officials affecting the environment and vital resources such as fish, food or fuel are immune from challenge in this way."
In the Telegraph David Blair looks at the EU's foreign and defence policy and argues that because the Council of Ministers decides foreign policy by consensus, no reforms will alter the fact that member states "do not think of themselves as forming a cohesive unit, with the same outlook, and the same set of global interests."
In the Sunday People, Eamonn Holmes looked at EU employment law and wrote "you have got to scratch your head when you hear of the ridiculous working codes of practice that emerge from European government."
Christine Lagarde, France's Finance Minister, declared in an interview yesterday that the EU is not seeking ceilings on banker bonuses but will urge G20 leaders to limit payouts by linking them to performance, reports the Irish Independent. She stressed that "no one talked about a ceiling figure".
Irish Independent City AM
Jacques Barrot, EU Justice and Home Affairs Commissioner, has decreed that asylum seekers making their way to France's channel ports should be allowed to continue their journey to Britain, reports the Express. Express: Leader Express Mail
The Observer reported on strikes and shortages in the dairy industry across Europe.
In the Weekend FT, Tony Barber looked at the political rows surrounding the German government-sponsored deal to sell the Opel car manufacturer to a Canadian-Russian consortium and noted that the European Commission's "credibility is at stake."
Weekend FT: Barber
The Times reports that Sir Win Bischoff, Chairman of Lloyds Banking Group, has offered to sell Scottish Widows, Cheltenham & Gloucester, and some branches of Lloyds in order to satisfy EU competition rules and hold on to Halifax, the mortgage lender that Lloyds TSB acquired when it bought HBOS last year.
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: openeurope.org.uk or call us on 0207 197 2333.