European Parliament defies UK Government's cuts by calling for 5.9% increase to EU budget;
EP President: MEPs acted "with a great sense of responsibility"
The European Parliament yesterday voted to increase the EU budget by 5.9% to €130bn on the same day that Chancellor George Osborne announced huge spending cuts in the UK. The EP's proposed budget increase for 2011 would increase the UK's gross contribution to the EU budget by over £840m. The Telegraph notes that included in MEPs' demands is a staffing increase of 388 posts to the civil service to assist their work. On top of that, more money is also set aside for an additional £32,000 a year towards new MEP assistants or pay rises for existing researchers who can earn up to £80,000 a year.
Open Europe is quoted on page two of the Sun saying, "When the UK government is being forced to make difficult choices about the public services it can afford, taxpayers will be outraged to see more of their money heading to Brussels." Open Europe is also quoted by the Mail saying, "This demonstrates how seriously out of touch MEPs are with reality."
EUobserver quotes European Parliament President Jerzy Buzek saying, "The European Parliament has acted with a great sense of responsibility." MEPs and national government are now in deadlock over the 2011 budget and will have three weeks from 27 October to reach a compromise. David Cameron has confirmed that, in these negotiations, the UK will call for a cash freeze to the budget, saying, "We're working hard to make this case across Europe."
Meanwhile, Reuters reports that a European Commission technical paper, published yesterday, sets out different estimates of how much various EU taxes could raise for the EU budget. The article notes that the estimates show that a financial transaction tax could bring about €20bn, while a financial activities tax, which would bring in more funds from countries that have financial centres, such as the UK, could generate about €25bn.
European Parliament's decision to extend maternity leave rules could cost UK economy £2.5bn a year
The European Parliament voted yesterday to extend the European Commission's proposals on maternity leave to 20 weeks on full pay. An internal European Parliament impact assessment estimates that the cost of the changes to the UK will be €3bn (£2.5bn) per annum. The BBC quotes a UK Department for Business spokesman saying, "We know other member states share our concerns about the real costs of this directive". El Mundo reports that the move will cost the Spanish economy between €284m and €988m, while Handelsblatt reports estimated extra costs of €1.5bn to the German economy.
A comment piece in Die Welt argues, "Every year the EU interferes more and more into fields that are actually the domain of member states, like social and health policy."
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Merkel's coalition partners question EU treaty deal with Sarkozy;
FDP Chairman: "The agreement left us gaping"
The Irish Times reports that the Franco-German deal reached this week - whereby France backed German calls for a new EU treaty and a permanent crisis resolution mechanism for the eurozone in return for weaker sanctions on debt and deficit rule breakers - has been condemned by Chancellor Angela Merkel's junior coalition partners, the FDP. "The agreement left us gaping," said FDP General Secretary Christian Lindner. "Despite other progress, this compromise may be too soft to guarantee a hard euro."
Die Welt quotes Dr Silvana Koch-Mehrin, an FDP MEP, saying Merkel had been "bamboozled" by French President Nicolas Sarkozy and had misled the German people. "[Merkel] had point-blank promised the German taxpayers: Germany will give Greece billions in aid, but the stability pact for the euro will be strengthened. Merkel has broken this promise," she said.
In his FT Deutschland column, Wolfgang Muenchau argues that, while France managed to achieve its aims, Germany sadly fell short of protecting its interests, adding that 'German diplomacy' is an "oxymoron".
In Handelsblatt, columnist Thomas Hanke argues that this week's events have shown that Germany's influence in the EU is "dwindling away". He adds, "France is a difficult friend to have, Britain is isolationist, Italy like a ghost-light. It is worrying that due to these mistakes, our influence is dwindling away".
The WSJ's Heard on the Street column notes that new reporting requirements and 'passport' envisaged by the draft AIFM Directive agreed by EU finance ministers "will certainly raise compliance costs" for investment fund managers. However, the article suggests that the costs are unlikely to be as high as Open Europe's previous estimates, based on an earlier version of the Directive. Open Europe is also cited by Spanish economic daily Expansión.
Irish Independent: EU targets for Ireland's deficit reduction "could spell disaster";
Trichet opposes new deal on EU budget rules
A report by the Irish Government's economic think-tank, the Economic and Social Research Institute, claims that Ireland will need to extend its debt reduction programme until 2016. The report warns that the EU requirement that Ireland impose a package of budgetary cuts and taxes of €15bn over just four years is unrealistic and poses a risk of "overkill", reports the Irish Times. The European Commission has rejected calls for the deadline to be extended. An Irish Independent leader argues that the EU targets "could spell disaster."
Meanwhile, a memo seen by the FT reveals that the President of the European Central Bank, Jean-Claude Trichet, has objected to some of the new rules proposed for the eurozone, decided this week by EU finance ministers. The article notes that Mr Trichet has demanded that a draft of the new rules circulated this week be withdrawn because it did not explicitly note his objections.
Meanwhile, Swedish Finance Minister Anders Borg has rejected Franco-German calls for EU treaty change to create an 'orderly default procedure' for the eurozone. "We could have a robust mechanism to solve future crises without treaty change," he said, according to DPA.
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Commission proposes new EU rules on failing banks
EU Internal Market Commissioner Michel Barnier yesterday unveiled new proposals to give national regulators more powers to directly intervene in failing banks in the future. The Telegraph notes that the European Banking Authority - one of the new pan-EU financial supervisors - will have the power to intervene directly if a cross-border bank on the brink of failure is posing a threat to the stability of the markets. EUobserver reports that, under the proposed rules, "resolution colleges" made up of national financial regulators would be set up. They would be empowered to order a failing bank to sell part of its assets and suspend the payment of dividends.
The Commission's proposals also include the creation of a network of national "resolution funds" to be used for future bank bailouts. These funds would be subsidised through national levies imposed on banks by member states. However, the UK and France have already voiced opposition to this scheme, arguing that money raised from banking levies shouldn't be earmarked for specific 'bailout funds', as this could create moral hazard.
MEPs approve new EU foreign service's budget
The European Parliament yesterday cleared the way for the launch of the European External Action Service - the new EU diplomatic corps - adopting new budgetary and staff rules by a large majority. EUobserver reports that the adopted package gives MEPs a greater say on the appointment of diplomats in EU embassies overseas, but not on member states' spending of the European Development Fund or on the EU's military missions.
The article also notes that the location of the EEAS's official offices remains unknown, since the European Council's Secretary-General Pierre de Boissieu does not intend to move his translators out of the Lex building in the EU quarter in Brussels. As a result, EU Foreign Minister Baroness Catherine Ashton could have to opt for the so-called Triangle building, at a cost of €9 million a year.
MEPs likely to clash with member states over cross-border health care next week
European Voice reports that next week MEPs on the Public Health Committee will vote on new EU rules on cross-border health care which are likely to clash with a compromise reached between national governments earlier this year. The European Parliament is expected to water down the criteria on whether patients need advance permission from national healthcare authorities before going abroad for treatment, for which they would then be reimbursed.
The Parliament reports that French and German MEPs have forced a postponement of a vote on an initiative by Conservative MEP Ashley Fox to scrap one of the Parliament's trips from Brussels to Strasbourg, which could save the taxpayer €15m.
European Voice reports that EU Industry Commissioner Antonio Tajani is expected to say that new EU laws, from financial to climate regulation, should be tested for their effect on European industry's international competitiveness.
Euractiv France reports that French MPs are divided over European Commission's proposals to boost the EU's own resources through the introduction of an EU-wide tax.
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.