Tuesday

26th Jul 2016

Agenda

Horsetrading on budget and banking union continues this WEEK

  • The European Central Bank may lower its key interest rate this week (Photo: Valentina Pop)

Negotiations on the EU budget for 2012-2013 continue this week, as do talks on a single banking supervision for eurozone banks.

A tentative deal on next year's budget agreed between the Cypriot EU presidency and the European Parliament's chief negotiator Alain Lamassoure is up for debate in the parliament's budget committee on Tuesday (4 December).

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But already on Friday, European Parliament chief Martin Schulz downplayed expectations and said "there can be no talk of an agreement at this stage" because not all the parliament's demands had been incorporated.

The deal provides €6 extra billion to fill a funding gap for 2012 and limits 2013 spending at €133 billion, billions less than what the EU commission and the Parliament had asked for.

Talks on the 2013 budget broke off earlier this month ahead of a summit at which EU leaders failed to agree on the longer EU budget framework for 2014-2020. If there is no deal on the long-term budget, the 2013 budget will be rolled over each year, which is why agreement is proving so difficult.

MEPs will also have the opportunity on Monday to grill the finance ministers of the eurozone's two largest economies - Germany and France - on how they are dealing with the euro-crisis. German finance minister Wolfgang Schaeuble and his French counterpart Pierre Moscovici have in recent weeks tried to patch over their divergent views on management of the crisis.

One key difference of opinion concerns the so-called banking union on which the Cypriot presidency is seeking a deal during a meeting of finance ministers on Monday and Tuesday. The idea concerns setting up a single supervisory body within the European Central Bank for all eurozone banks.

Germany and Sweden have expressed their scepticism an agreement can be reached. Germany is seeking real auditing powers for the ECB and only the big banks supervised first. France prefers a "licensing" system with national supervisors acting on behalf of the ECB extending to all banks.

The EU commission on Wednesday will seek to boost its profile as an unemployment-fighter with a non-binding proposal on how to hire more youngsters across Europe, based on "best practice" examples from Austria and Finland. Over half of youngsters in Spain and Greece are without a job, while in Italy, the youth unemployment rate is at 35 percent.

The same day, the commission will also table legislative proposals on relaxing state aid rules so that member states can be exempt from having to inform the commission when they give out subsidies to culture, innovation and to areas affected by natural disasters.

On Thursday, the European Central Bank will hold its monthly council where it may decide to lower the key interest rate as recession in the eurozone continues and Germany and France have very modest growth rates.

At the end of the week, EU leaders are expected to travel to Oslo, where on the following Monday the EU will be awarded the Nobel Peace prize.

Investigation

ECB in ‘bail-out’ of scandal-tainted VW

The ECB has started to “bail out” Germany’s Volkswagen Group by buying its corporate bonds, but other EU-linked banks continue to shun the scandal-tainted firm.

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