Governments in the eurozone’s periphery are pursuing a scorched earth fiscal strategy. Distressed governments may not be able to afford a fiscal stimulus or even a delayed consolidation, partly because of the size of their deficits and partly because they do not fully control the currency in which that debt is issued, writes John Springford, a research fellow at the Centre for European Reform (CER).
The election of François Hollande as French president has excited some of those who blame Germany’s emphasis on fiscal austerity for many of the eurozone’s ills. Hollande has promised to refocus EU policies on growth and employment. But can Hollande – as he prepares for his first ever meeting with Chancellor Angela Merkel – really make a difference? Maybe, if he handles Merkel with great diplomatic dexterity, writes the CER’s Charles Grant.
Eurozone policy-makers often complain that they are not given enough credit for all the changes they have pushed through since the Greek sovereign debt crisis broke out. It is an understandable reaction, but their claim that the changes represent a major step towards greater fiscal union is doubtful, writes Philip Whyte, senior research fellow at the Centre for European Reform (CER).
The Czech government hailed the Cabinet deal paving the way for a proposal for nationwide referenda as a significant breakthrough. The fine details of the proposal and obstacles that any petition for a referenda will face before it can be put to the people and the thin chances of such a vote getting the required 50 percent participation puts a very different slant on the so-called move towards direct democracy.
Prime Minister Petr Nečas (Civic Democrats, ODS) has downplayed his government’s decision not to sign the EU fiscal discipline treaty. Speaking at the “Economic Interests of the Czech Republic in the EU” conference on Monday, the center-right politician also said he was working towards closer EU integration in the form of finalization of the single market — which he lamented was not completed decades ago.
Czech National Bank (ČNB) stress tests show the domestic banking sector is resilient to potential adverse shocks — such as a deeper recession in the European Union due to the eurozone debt cirsis — thanks to good capitalization, profitability and balance sheet liquidity, the central bank said in a report on Tuesday.
Czech Prime Minister Petr Nečas says in an open letter published Thursday that tendencies towards protectionism are stifling one of fundamental reasons for the existence of the EU – the open internal market. Further, he says one reason behind his decision not to sign the new EU fiscal austerity agreement was that it was presented as a fait accompli to be signed within minutes.
Czech Foreign Minister and leader of the TOP 09 party Karel Schwarzenberg has said he is contemplating leaving the government over Prime Minister Petr Nečas’ (Civic Democrats, ODS) refusal to sign the EU’s fiscal discipline treaty, but noted there is time yet for the ODS to opt in and open the way for the next Czech president to ratify the treaty in early 2013.
Czech foreign minister Karel Schwarzenberg says Prime Minister Petr Nečas’ decision not to sign the new EU budget and fiscal discipline agreement will damage the Czech Republic’s national interests. PM responds by suggesting Schwarzenberg is lazy and immature and suggest he should more time in the Czech Republic engaging in domestic political issues.
The new EU treaty on fiscal discipline will be signed off on in early March by only 25 of the 27 member states, after the Czech Republic – citing “constitutional reasons” — announced late Monday its decision to stay out of the pact, along with the United Kingdom, although the Czech prime minister left the door open to joining later if certain issues are addressed.