Now that the European Council has approved the MFF 2014-2020 commentators are indulging on an evaluation of “who wins, who losses”, whether at stake are policy objectives or countries. The variety of opinions is disorienting at best. Read more
Bruegel blog
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How to read the EU budget deal? I
12th February 2013
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L’Europe en morceaux
12th February 2013
Avec un David Cameron acharné à préserver son rabais et à dégraisser la bureaucratie bruxelloise et un François Hollande soucieux de sauvegarder les intérêts des agriculteurs hexagonaux, les négociations budgétaires de la semaine dernière ont offert l’apparence d’une dramaturgie familière. L’Europe, pourtant, n’est plus la même que lorsque Tony Blair et Jacques Chirac s’affrontaient sur ce même budget. Si elle s’est révélée à l’épreuve impuissante à faire des choix porteurs d’avenir et à y affecter des moyens, c’est pour beaucoup parce qu’elle est écartelée entre des pays aux situations économiques disparates, dont les priorités diffèrent au moins autant par nécessité que par fidélité à des positions doctrinales. Read more
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Good deal for Ireland, but no magic bullet
12th February 2013
The promissory note deal announced last week by the Irish government and the Central Bank of Ireland will bring benefits to Ireland’s public finances and to the country’s financial stability. As a result, Ireland’s prospects for economic recovery and its chances of emerging from its EU/IMF programme of financial assistance have improved markedly. Indeed, yields on long-term Irish government bonds are now well below those of Italy and Spain. Read more
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L’euro fort : fausses frayeurs et vrais dangers
11th February 2013
Les dirigeants français, François Hollande en tête, s’alarment de la remontée de l’euro. Leurs homologues allemands rétorquent qu’il n’est pas surévalué. Qui a raison ? L’affaire est assez compliquée pour mériter une réponse en plusieurs temps. Read more
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How to read the EU budget deal?
8th February 2013
The approval of the Multiannual Financial Framework (MFF) 2014-2020 was preceded by the usual agonizing negotiations, but a deal was eventually struck at the European Council of 8 February 2013. The latest deal is much lower than the European Commission’s proposal. Commitments go from 1033bn euros (1.08% of EU GNI) down to 960 bn euros (1% of EU GNI). Payments, which what is going to be truly disbursed over the next seven years, go down to 908.5bn from 988bn euros in the EC proposal. Compared with the MFF 2007-2013 it is reduction in the size of the budget in the order of 0.12% of EU GNI. Read more
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Blogs review: The Monetary Regime and the drawbacks of NGDP targeting
8th February 2013
What’s at stake: There has been much ink spilt (except maybe in the eurozone) over the last few years about the need to move away or at least complement the flexible inflation-targeting framework so that central banks can create expectations of future expansionary policy in a liquidity trap without changing its long-run goals. One idea – Nominal GDP targeting – has gathered most attention. After qualifying the idea as “powerful” and raising expectations of a possible future adoption, the Bank of England governor-designate Mark Carney reversed course and said that he was “far from convinced” by the idea in front of the Treasury select committee yesterday. While he didn’t lay out precisely the intellectual reasons for that change of heart, we’ve tried to put together some of the reasons put forward against NGDP targeting. Read more
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Franco-German energy cooperation – from a joint declaration to measurable results
7th February 2013
At the celebrations of the 50th anniversary of the Elysée treaty the Franco-German Council of ministers issued a joint declaration on guidelines for future cooperation [link]. The document called, in the expectable diplomatic language, for a closer Franco-German cooperation in the energy sector. Read more
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Standard-setting abuse: the case for antitrust control
7th February 2013
The issue: Standards reduce production costs and increase the value of products to consumers. Think about mobile phones: using the same technology allows anybody who owns a mobile phone to call or be called by any other mobile phone owner. The bigger the network, the better for consumers. Read more
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SNS Reaal expropriation: Should Senior bondholders carry the burden on future bank resolutions?
6th February 2013
Last week the Dutch government announced the full expropriation of SNS Reaal, the 4th largest Dutch bank and decided to write-off shareholders and junior bondholders while senior bondholders where left untouched. Read more
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What does the Big Mac say about Euro Area adjustment?
6th February 2013
The Big Mac Index offers some quick insights into the state of currencies around the globe by comparing the price of Big Macs across countries. Of course, the Big Mac index was never intended as a precise gauge of currency misalignment, as the Economist has just reminded us in its latest update. According to them, it is just about making PPP and other difficult exchange rate concepts more digestible. Read more