http://www.telegraph.co.uk/news/worldnews/europe/eu/9668841/EU-budget-talks-collapse-following-rows-over-funding-increase.html
9:53AM GMT 10 Nov 2012
410 Comments
Eight hours of negotiations in Brussels ended in walkouts after MEPs refused to drop demands for an extra £13.8 billion in European Union spending for this year and 2013.
The failure of the talks casts a fresh doubt on whether a major summit to agree to the EU's future funding from 2014 to 2020, scheduled for later this month, can go ahead.
There had already been speculation that the summit would be cancelled because David Cameron was refusing to drop his threat of using Britain's veto to block any future increase above the level of inflation.
Friday night's deadlock was over demands by the European Commission for a £7.3 billion spending increase by the end of this year to meet a funding shortfall, figures that are disputed by Britain and other governments.
At the same time, the European Parliament wants to reinstate over £6.5 billion in funding that had been cut by governments from next year's budget to reflect national austerity programmes.
The two demands, for this year and next, would increase Britain's EU contributions by £1.6 billion at a time of deep cuts to public services domestically.
During the acrimonious negotiations, Greg Clark, the Financial Secretary to the Treasury, attacked the commission for asking for extra 9.65 per cent in funding for this year almost 11 months into 2012.
"Europe must practice the fiscal discipline that it demands of member states," he said.
"Ordinary working people, whether in the UK or elsewhere, cannot be asked to pay more to Europe when they are enduring cuts at home.
"We have made it clear that we want to see the annual budget cut in real terms and certainly not increased. That remains our view for 2012 and 2013."
The negotiations had been scheduled to finalise spending for 2013 but they began to break down before they even began over an amending budget for this year.
Alain Lamassoure, the French MEP who heads the European Parliament's budget committee, said that governments "were unable to negotiate so the negotiations were suspended."
"The European Commission will now have to present a new proposal to enable talks to resume," he said.
Jeroen Dijsselbloem, the new Dutch finance minister, said he did not believe the commission's claim that the EU would be unable to pay its bills without the extra money.
"I'd question that very much. The Commission has to re-prioritise, that's just the way it is. Budgetary discipline is not just for the member states," he told Reuters.
Peter Tempel, Germany's permanent representative to the EU, echoed British and Dutch complaints. "We take the view that implementation of the budget in 2012 is not a basis for claims made by the Commission," he said.
Talks could now resume on Tuesday.
and Germany needs to tell the EU to cut the crap because they now see France is going to hit the wall - just like Italy and Spain ! And rightfully , Germany is concerned ( panic / panic / panicking ! )
http://www.zerohedge.com/contributed/2012-11-09/germanys-fear-and-desperation-leak-out
Submitted by testosteronepit on 11/09/2012 21:12 -0500
and Germany needs to tell the EU to cut the crap because they now see France is going to hit the wall - just like Italy and Spain ! And rightfully , Germany is concerned ( panic / panic / panicking ! )
http://www.zerohedge.com/contributed/2012-11-09/germanys-fear-and-desperation-leak-out
Germany's Fear And Desperation Leak Out
- European Central Bank
- Eurozone
- France
- Germany
- Greece
- Gross Domestic Product
- Italy
- Lehman
- Recession
- Reuters
Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter
A hullabaloo erupted between France and Germany that both governments are trying to silence to death. According to unnamed sources of Zeit Online and Reuters, German Finance Minister Wolfgang Schäuble broached an unprecedented topic with the members of Germany’s Council of Economic Experts on Wednesday when they presented their Annual Report. In its 49-year history of advising German governments, the Council has never delved into policy proposals for other countries. And yet, Schäuble asked them: Could they produce a reform concept for the troubled French economy?
The French, who are currently engaged in national soul-searching and navel-gazing to halt their declining “competitiveness,” were not amused. The office of President Francois Hollande wrapped itself in silence. Prime Minister Jean-Marc Ayrault brushed it off. The German Ministry of Finance declined to comment on “unofficial discussions.” Council Chairman Wolfgang Franz backpedalled: “That’s largely misinformation,” he said. “An order for a Special Report is not even in the most distant sight.” He figured that the French government “wouldn’t tolerate something like that.”
Nevertheless, he said, the government is highly interested in reform ideas that would make the monetary union more stable. And it is in this context that the Council would “think about France” in December. After which they would talk again with Schäuble, he said.
But the Council is already “increasingly worried” about the economic developments in France, admitted Council member Lars Feld when he presented the Annual Reportto Schäuble. “The largest problem isn’t Greece anymore, or Spain or Italy, but France because France has done nothing to rebuild its competitiveness and is even heading in the opposite direction.” He didn’t mince words. “France needs labor market reforms,” he said. “It is the country among Eurozone countries that works the least each year; so how do you expect any results from that?”
The problems are piling up in France. While central government spending—56% of the economy!—is expected to remain relatively constant and provide some stability, the private sector is deteriorating with breathtaking speed. Every day, new evidence seeps out.
On Friday, it was an Insee poll of CEOs in the manufacturing sector. They’re cutting investments in plant and equipment in the second half. In 2013, they would reduce their investments by an additional 2%—though in the previous poll in July, they’d planned on increasing their investments by 5%. A harsh reversal [one that has been playing out for months; read... Worse than the Infamous Lehman September: France’s Private Sector Gets Kicked off a Cliff].
Then the Bank of France released an estimate for fourth quarter GDP: it would shrink by 0.1%. For the third quarter, it also estimated a decline of 0.1%. If these figures are confirmed, France entered a recession in July. Five quarters in a row of total stagnation, a first in France’s post-war history!
The Germans are concerned. France bought €101 billion of German goods in 2011, or 10% of total exports. But German exports fell 2.5% in September, and exports to the Eurozone crashed 9.1%. Germany has been through this before. Its economy lives and dies by its exports [The Noose Tightens on Germany’s “Success Recipe”].
Schäuble must feel the pressure. But fear of a dip in exports to France might not be enough for him to risk a diplomatic confrontation with his most important neighbor. He certainly wouldn’t want to stir up, without good reason, even more accusations of meddling and Teutonic arrogance. So why this unusual request?
Fear and desperation within the government about a much greater threat. The credit markets, which are currently sleeping through the French private-sector fiasco, might wake up someday—as Greece found out, it can happen suddenly—and demand much higher yields. Even if still digestible for France, it would likely throw Spain over the edge, and Italy would follow. Or the markets might walk away from France entirely.
France is too big to bail out. If the debt crisis suddenly arrived in Paris, only all-out, no-holds-barred, unrestricted bond-buying operations by the ECB could save the euro. But it would violate even the last pretense of treaty-based limitations, and would in the process debase the euro. While this might please some countries, including France, it would enrage German voters who might take out their anger on Chancellor Angela Merkel and her government. And that strikes terror into their hearts.
Alas, she still has big plans. On Wednesday, she addressed the European Parliament, the only democratically elected European institution—by design, an emasculated one. There, she laid out her ideas on how to bring European nations together to where their budgets and other national prerogatives would become part of her “domestic policy.” And she’d be on top of the heap. For that whole debacle, read.... Merkel Has A Dream.
