EUROZONE NEWS AND ANALYSIS

May 13, 2010 at 4:42 am | Posted in Economics, Eurozone, Financial, Germany, Globalization, History | Leave a comment

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Eurointelligence Daily Briefing – 13 May 2010‏

Eurointelligence News Briefing

Eurointelligence (daily_briefing@eurointelligence.com)

Thu 5/13/10

A far reaching proposal for eurozone governance reform

  • The European Commission proposes a complete overhaul of the eurozones governance framework;
  • focus to shift from deficit to debt sustainability;
  • upgrade of existing process to deal with intra-eurozone imbalances to encompass areas currently off-limits;
  • proposes a process of early-stage budgetary co-ordination;
  • there is no provision for a single European government bond;
  • initial reaction in Germany was negative, but Merkel welcomed the proposal as a step in the right direction;
  • former US treasury secretary John Snow says eurozone will not survive unless it leaps into a single capital and labour market;
  • Zapatero announces a package of fiscal consolidation, amounting to 0.5% of GDP this year, and 1% next year;
  • package includes cuts in the pay of civil servants, and many other social benefits;
  • package is likely to meet with resistance from Spanish trade unions;
  • Portugal has also announced additional measures;
  • Hans Werner Sinn argues that the EUs rescue package is diametrically opposed to Germanys national interest;
  • Gavin Hewitt, meanwhile, argues that Germanys reluctance to subsidise its EU partners may chime with David Camerons vision of Europe.

Comment and Analysis

A new breed of fiscal watchdogs

By: Lars Calmfors, George Kopits, and Coen Teulings

Faced with a looming debt sustainability problem, EU member governments have been left to their own devices. Both inside and outside the euro area, they are weighing well-known options for reforming entitlement programs and the tax system, to be complemented with the introduction of a new breed of independent fiscal institutions at the national level. Inspired by the experience of the US Congressional Budget Office (CBO) and the Netherlands’ Central Planning Bureau (CPB), in recent years, Belgium, Canada, Sweden, Hungary, and Slovenia have adopted similar institutions, in some cases under the aegis of a council of fiscal experts.

This is the Daily Briefing from www.eurointelligence.com.

Eurointelligence Daily Briefing – 13 May 2010‏

Eurointelligence News Briefing

Eurointelligence (daily_briefing@eurointelligence.com)

Thu 5/13/10

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