Echoes of the crisis
Wednesday 13 June 2012
Italy borrows €6.5 bn as planned but rates surge: The Italian Treasury borrowed €6.5 billion with a 12-month bond issue, on 13 June, as planned, but its interest rates leapt as the country came back into the sights of financial markets at the start of the week. The Bank of Italy announced that interest rates for the bonds rose to 3.972% compared with 2.34% during the previous bond issue, on 11 May. Demand by investors remained strong, at €11.26 billion.
Madrid insists that EU aid has no austerity or reform strings attached: “There are no supplementary conditions on budget policy or structural reforms” in the EU aid of up to €100 billion Spain will receive for its banks, the economy minister repeated, on 13 June. “Loan conditions will be specific to the banking sector with no requirement for a broader austerity programme,” Luis de Guindos told Spain’s parliament in response to the opposition’s questions on what would be expected of Spain in return for the funds.
Schäuble critical of continuing retirement possibilities at age 60 in France: German Finance Minister Wolfgang Schäuble criticised, in an interview published on 13 June in the Italian daily
La Stampa, the French government’s decision to continue to authorise retirement for certain employees at age 60. “We have decided in Europe to adapt our social security systems to the demographic situation. All our societies are ageing. But the decision by [French] President Hollande to lower the retirement age is not in keeping with that approach,” the minister said. “The German government and Germany are willing to show more solidarity” but “the solidarity of others – and even of the Greeks – starts with delivering on one’s own promises,” he added.
Schäuble: No eurobonds without transfers of sovereignty: German Finance Minister Wolfgang Schäuble said, on 12 June, that it would be a “serious mistake” to introduce eurobonds if the states were not willing to hand over more budget sovereignty to the EU. “It would be a serious mistake to pool [debt] guarantees without more transfers of sovereignty,” he told a gathering of entrepreneurs close to the Conservative CDU party. In other words, the states that want to pool debt at European level have to agree in exchange to give up part of their control over their own public finances. Schäuble added that by bringing down interest rates for countries with financial woes, eurobonds would dissuade them from “carrying out the necessary reforms”.
Socialist MEPs support revision of Greek austerity plan: Several Socialist MEPs put out an appeal for a revision of the austerity plan imposed on Greece by its fund donors, on 12 June, five days ahead of legislative elections crucial for the country’s membership of the eurozone. “The situation in Greece requires a strong gesture. In my opinion, we are underestimating the risk of a Greek exit from the eurozone,” said Gianni Pittella (S&D, Italy), vice-president of the European Parliament and a signatory of the text, at a press conference. “Let’s consider a change in the memorandum of understanding. It is not fair to differentiate between Greece and Spain,” he continued. The idea is to propose “concrete changes to the memorandum, which is possible immediately because it is checked every three months” by the fund donors, added EP vice-president Anni Podimata (S&D, Greece). The appeal has been signed by 12 MEPs so far, but “the list will certainly grow longer,” declared Pittella.
“It is not fair to differentiate between Greece and Spain”