European Union has best financial quarter since late 2011

(...)

Eurostat, the European Union’s statistics office, said the 17 EU countries that use the euro saw their collective economic output increase by 0.3 percent in the April to June period from the previous quarter.

That’s the first quarterly growth since the eurozone slipped into recession in the last three months of 2011. The ensuing recession of six quarters was the longest since the euro currency was launched in 1999.

The improvement made up for the previous quarter’s equivalent decline and was moderately better than the 0.2 percent anticipated in the markets. Growth, however anemic, had been predicted by many economists following an easing in market concerns about Europe’s debt crisis in the past year and record low interest rates from the European Central Bank.

The eurozone’s growth, which translates to an annualized rate of about 1.3 percent, is still well below the 1.8 percent the United States enjoyed during the second quarter. The wider 27-country EU, which includes non-euro countries such as Britain and Poland, also emerged from its own, milder recession, and like the eurozone is also growing at an annualized rate of around 1.3 percent.

Growth in Europe provides a boon to the global economy. The EU, which now totals 28 following Croatia’s accession in July, has a population of around 550 million and its annual gross domestic product stands at around $17.3 trillion — both more than the United States, which has GDP of $16.6 billion for 315 million people.

Growth in Europe provides a boon to the global economy. The EU, which now totals 28 following Croatia’s accession in July, has a population of around 550 million and its annual gross domestic product stands at around $17.3 trillion — both more than the United States, which has GDP of $16.6 billion for 315 million people.

The EU’s recovery marks the first time since a brief period in 2011 that the four major pillars of the world economy — the United States, China, Japan and Europe — are growing at the same time.

The figures will be greeted with a sigh of relief by Europe’s policymakers, who have spent nearly four years grappling with a debt crisis that has threatened the very future of the euro. But they were not ready to declare victory, aware that this is only the start of what is expected to be a slow and uneven recovery.

“This slightly more positive data is welcome — but there is no room for any complacency whatsoever,” Olli Rehn, the EU’s top monetary official, said in his blog after the release of the figures. “I hope there will be no premature, self-congratulatory statements suggesting ‘the crisis is over.’”

The improvement was largely because of solid growth of 0.7 percent in Germany and a surprisingly strong 0.5 percent bounce-back in France following two quarters of negative growth.
Link

EU deplores Egypt deaths, calls for restraint

The European Union deplored the killings in Egypt of dozens of demonstrators in Egypt on Wednesday as security forces cleared protest camps and it called for maximum restraint by all sides.

European Union foreign policy chief Catherine Ashton said she was following the situation in Egypt with great concern. "Confrontation and violence is not the way forward to resolve key political issues. I deplore the loss of lives, injuries and destruction in Cairo and other places in Egypt. I call on the security forces to exercise utmost restraint and on all Egyptian citizens to avoid further provocations and escalation," she said in a statement.

(...)
See more at Reuters.com

EU jobless rate falls for 1st time in over 2 years

The European Union's unemployment rate fell in June for the first time in almost two-and-a-half years, a sign that a long deterioration in the bloc's jobs market may be coming to an end as the economy stabilizes.

The number of jobless people in the countries that use the euro also fell, albeit modestly, for the first time in two years.

Eurostat, the EU's official statistics agency, said Wednesday that 10.9% of the work force in the 27 nations that then formed the EU were unemployed in June, down from 11.0% in May. That is the first fall in the jobless rate since January 2011.

The number of unemployed in the 17 euro-zone countries edged down to 19.27 million from 19.29 million, the first decline--albeit a modest one--since April 2011. The fall wasn't sufficient to move the jobless rate overall, which held firm at 12.1%--its highest on record--for the fourth straight month.

Signs that unemployment may be peaking in the EU and the 17 nations that use the euro add to recent evidence from consumer and business surveys that the region's economy has stabilized in the middle of the year, and could gather some momentum in the months to come.

Economists say any recovery will be weak in the near term, and beset by uncertainty due to problems in the euro zone in particular. The currency bloc's governments are committed to growth-sapping austerity measures, and businesses are struggling to gain financing to invest due to a hobbled banking system.

The European Central Bank isn't expected to take action to support the economy at its meeting Thursday.

Eurostat said in a separate release Wednesday that the annual inflation rate in the euro zone was unchanged in July at 1.6%, beneath the ECB's target area of just below 2.0%.

MarketWatch

EU's top diplomat meets with detained Morsi in Egypt

The European Union's top diplomat said Tuesday after meeting with deposed Egyptian President Mohammed Morsi that he is well, and that she urged all those she met with on the need to move forward peacefully following his ouster nearly a month ago.
It was Morsi's first contact with the outside world since he was toppled in a military coup on July 3.
Morsi's status has emerged as a source of contention between Egypt's interim leaders and the international community, with human rights groups insisting he either be charged or released.
EU foreign policy chief Catherine Ashton also called for an inclusive political process going ahead and an end to the violence that has left the Arab world's most populous nation deeply divided between opponents and supporters of the ousted Islamist leader.
(...)
FoxNews

Europe and China Agree to Settle Solar Panel Fight

The European Union’s trade chief said on Saturday that a deal had been reached with China to settle a dispute over exports of low-cost solar panels that had threatened to set off a wider trade war between two of the world’s largest economies.

The settlement essentially involves setting a fairly high minimum price for sales of Chinese-made solar panels in the European Union to try to prevent them from undercutting European producers.

Those producers accused Chinese manufacturers of benefiting from enormous loans from state-owned banks and other government assistance that enabled them to charge prices that would otherwise be uneconomical.

“We have found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level,” Karel De Gucht, the European trade commissioner, said in a statement.

The deal immediately met with ferocious criticism from the European manufacturers that had filed the complaint, and it complicates a similar dispute between the United States and China.

On Saturday, officials at the European Commission said they could not give details of the deal, including the price that Chinese exporters would pay to sell their panels in Europe, until the arrangement had been formally approved by the commission. But a European Union official, who spoke on condition of anonymity because the deal had not yet been formally approved, said the two sides had agreed to a minimum price of 0.56 euros per watt (74 cents), which would base any potential surcharge on the amount of electricity generated by each imported panel. 

The European solar manufacturers who lobbied for tougher action against the Chinese exporters on Saturday promised to sue over the settlement. The agreement “is contrary in every respect to European law,” said Milan Nitzschke, the president of EU ProSun, an industry group. A minimum price of 0.55 to 0.57 euros was at the level of “the current dumping price for Chinese modules,” the group said in a statement. 

The arrangement would cover exports from 90 of about 140 Chinese exporters that were examined during the investigation, and that represent 60 percent of the panels sold in Europe, the government official said. Those 90 companies would no longer face tariffs that were put in place in June. Chinese exporters that did not agree to the terms will still face tariffs that are set to rise to 47.6 percent on Aug. 6 from the current level of 11.8 percent, the official said.

The Chinese government hoped from the start of the trade case with the European Union for a negotiated settlement instead of a legal battle. This deal comes as a relief, said He Weiwen, the co-director of the China-United States-European Union Study Center at the China Association of International Trade in Beijing.

(...)

Link (New York Times)

Member states agree to fast-track youth money

A low-key EU summit finished Friday (28 June) with an agreement to fast-track money to tackle youth unemployment and boost lending to small companies, but the meeting was nearly overshadowed by side issues, including a colouring-book featuring fictional MEPs.

"It has been a very productive summit," said EU Council President Herman Van Rompuy, with governments pledging to spend €6 billion over the next two years to support getting young people into jobs or training.

They also agreed to "prioritise" any unspent money from the budget for employment issues, although critics say the sums are too small to make a difference to the EU's 26 million without work.

The European Investment Bank was given the nod to lend hundreds of billions of euros to small businesses - seen as the backbone of the economy, but currently starved of credit.

There was no progress on further steps to banking union, considered essential for ensuring the longterm stability of the eurozone. But the commission said it would come forward with plans on how to wind down failing banks - a key and controversial part of banking union - within two weeks.

(...)
Euobserver

EU agrees agriculture policy reform

EU member states and the European Parliament on Wednesday (26 June) agreed major changes to the bloc's Common Agricultural Policy (CAP). The deal will determine how the €50 billion a year pot is divided among countries over the next 2014-2020 period.

CAP - which eats up the biggest chunk of the EU budget - is meant to aid farmers throughout the EU, but has been criticised for the opaque way it distributes subsidies. The biggest losers in the new deal are set to be large farms in countries such as France and Germany, as the agreement changes how entitlements for subsidies are calculated, no longer tying historical production levels to direct payments.

To stop large farms losing too much of their current subsidies, the deal gives governments the option of limiting the losses to 30 percent. Farmers receiving the least amount of direct payments per hectare will be entitled to at least 60 percent of the national or regional average.

Other provisions include abolishing sugar quotas by 2017, mandatory aid for young farmers, and tying some direct payments to help the environment in rural areas.

(...)

Meanwhile, one issue which remains to be decided is a proposals to limit payments to large farms to €300,000 a year - something governments say should be optional but which parliament wants to be mandatory.

(...)

Under the compromise, 30 percent of all future direct subsidies would be dependent on farmers becoming greener, including leaving 5 percent of their arable land fallow for wildlife.

(...)

Euobserver

EU Releases Hungary From Budget Scrutiny

"European Union finance ministers on Friday released Hungary from the bloc's budget scrutiny after a series of at times controversial moves by the Hungarian government to boost revenue. 

Since Hungary joined the EU in 2004 it has been under review for having budget deficits significantly higher than the EU-mandated 3% of gross domestic product. The European Commission, the EU's executive arm, proposed to allow the country to exit the monitoring procedure in May. Friday's decision formally ends the process".

Link

Czech PM to quit over graft and spying scandal

Czech Prime Minister Petr Necas is to resign today over a corruption and spying scandal involving his closest aid. Although he has denied any involvement, his coalition partners have pulled their support.

The ruling coalition will now try to form a new government led by someone nominated by Necas’s own Civic Democratic Party (ODS)

“I’ve been following the political developments which began last Wednesday and I know full well what the consequences are for me. That’s why I have announced to the Civic Democratic Party management and also to our coalition partners that I will step down as prime minister,” said Petr Necas.

Pressure had been growing on Necas since his chief of staff, Jana Nagyova was charged with bribing members of parliament and ordering intelligence agents to spy on several people. One of the targets was Necas’s own wife who is divorcing him.

Police who raided government and private offices last week have also detained two former MPs, an ex-minister and the current and former heads of military intelligence.

Link

MEPs approve Mimica as Croatia's first commissioner

MEPs have cleared Neven Mimica to become Croatia's first commissioner when the country joins the EU on 1 July. Mimica, who currently serves as his country's deputy prime minister, will be consumer protection commissioner until next year's European elections provided he receives the backing of EU governments.

Link

EU ends arms embargo on Syria rebels

European Union foreign ministers have said they will not renew an arms embargo on the Syrian opposition, due to expire on Saturday. But there was no immediate decision to send arms to Syrian rebels and all other sanctions remained in force.

More...
BBC

EU summit backs shale gas 'revolution'

EU energy policy must shift towards diversifying supply, with natural shale gas likely to be part of the mix, EU leaders said at a summit in Brussels on Wednesday (22 May). (...)

For his part, European Council President Herman van Rompuy said the summit was the "right moment for a strategic debate on European energy policy." He noted that "Europe will soon be the only continent dependent on imported energy." He also called for increased investment in energy infrastructure and efficiency in a bid to cut costs. 

Energy prices in Europe are over twice the levels in the US. The emphasis on competitiveness and prices is an indication that environmental and climate concerns are falling down the EU's list of priorities, however. (...)

Link

Hollande calls for euro government

French President Francois Hollande has called for the creation of a eurozone government as a solution to the wide-spread recession that threatens "the very identity" of Europe. Hollande spelled out his views on Europe during a two-and-a-half hour long press conference in Paris on Thursday (16 May) after being accused of lacking leadership and vision for the EU project.

With record low popularity rates and on the back of news that France has slipped back into recession, Hollande said an economic government for the eurozone, with its own budget, right to borrow and harmonised taxes, is the only way out the economic slump. "It is my responsibility as leader of a founding member of the European Union... to pull Europe out of the lethargy that has gripped it," Hollande said.

"If Europe stays in the state it is now, it could be the end of the project," he warned. 

Hollande said he can imagine the new structures - which would require a change to the EU treaties - to come into force within two years. He admitted that this step towards deeper eurozone integration would be a hard sell in Germany, where the idea of a "transfer union" - mutualising debt and redistributing wealth across the bloc - is taboo.

"Germany has several times said it is ready for political union, for a new phase in integration. Well France is ready to give body to this political union ... It is a question of European urgency," he said.

He argued that while the financial crisis is now "behind us ... what is hitting Europe is recession, provoked by austerity policies." The German government is seen as a staunch defender of austerity policies, even though it has changed its discourse in the past few months and speaks more about youth unemployment.

Amid debate on the lack of personal chemistry in current Franco-German relations, Chancellor Angela Merkel in Berlin noted that she is not "bosom friends" with Hollande, but that they "get along fine." "What we need above all is a common understanding in Europe - and there unfortunately isn't one yet - of what actually makes us strong and where growth comes from," she said at a European policy forum also on Thursday.

Euobserver

Bulgarian Center-Right Wins Most of the Votes

The center-right party of former Prime Minister Boiko Borisov has fallen far short of winning a majority needed to form a government, according to nearly final election results released on Monday, and appears to have no willing partners to join a coalition.

That would leave the second-place party in position to lead a new government. Borisov's Citizens for Bulgaria's European Development party amassed the most votes with 30.7 percent, followed by the opposition Socialists with 27 percent with 96 percent of the ballots counted.

Results published by the Central Election Commission showed that two more parties will enter Parliament — the mainly Turkish MRF party with 10.7 percent and the nationalist Ataka party with 7.4 percent.

Borisov led his party to victory in 2009 with just under 40 percent of the vote and headed a minority government, but resigned as prime minister in February amid sometimes violent protests against poverty, high utility bills and corruption.

More...

Link

EU agrees China solar panel duties

The European Commission agreed on Wednesday to impose punitive import duties on solar panels from China in a move to guard against what it sees as Chinese dumping of cheap goods in Europe. EU commissioners backed EU Trade Chief Karel De Gucht's proposal to levy the provisional duties by June 6 and make Chinese solar exports less attractive in Europe, two officials said.

The investigation into accusations of dumping is the biggest the commission has launched but Brussels is trying to tread a careful path, knowing it needs China, the EU's second largest trading partner, to help the bloc pull out from recession.
China's ambassador to the World Trade Organisation, Yi Xiaozhun, called the decision a mistake although he declined to comment on any possible retaliation by Beijing. "It will send the wrong message to the world that protectionism is coming," Yi told Reuters in Geneva.
Given that Germany and France are seeking to increase exports to China, De Gucht will try for a negotiated solution with new Chinese Commerce Minister Gao Hucheng before an EU deadline in December to cement the levies for up to five years. That could mean agreeing a minimum price at which all solar panels makers selling in Europe adhere to, diplomats said.
The EU duties, which will come into effect once the Commission publishes the decision in its Official Journal, will be set at an average of 47 percent, officials said.
Chinese solar panel production quadrupled between 2009 and 2011 to more than the entire global demand. EU producers say Chinese companies have captured more than 80 percent of the European market from almost zero a few years ago, exporting 21 billion euros ($27 billion) to the European Union in 2011. As a result, Chinese-made panels are as much as 45 percent cheaper than those made in Europe, industry executives say. Europe accounted for half of the global market in 2012, which was worth $77 billion, according to research firm IHS.
The commission started its investigation in September, taking up a complaint by a group of mainly German and Italian companies led by SolarWorld, which was once Germany's biggest solar group but now has 900 million euros in liabilities. Its smaller rival Q-Cells filed for insolvency last year.
The United States levied its own duties on Chinese solar energy products in 2012, arguing that China's rapid expansion into the industry has created a massive oversupply.
Solar is the leading source of renewable energy after hydro and wind, and companies are in a race to win contracts as countries seek to limit pollution and global warming.
Germany was the world's biggest market last year, followed by China, Italy and the United States, according to the European Photovoltaic Industry Association. Germany installed more solar panels than any other country in 2012, at 7.6 gigawatts of newly connected systems, while China was second with 5 gigawatts.
Solar covers about 3 percent of Europe's electricity demands but government support for developing the green energy source varies widely across Europe with the euro zone debt crisis dampening government support in Spain and Greece.
Europe's stance on solar energy is complicated by the fact that some in the EU solar sector, notably importers and installers, support cheap panel imports from China. They say EU tariffs would be damaging for efforts to develop clean energy. Some fear retaliation by Beijing. "Protective duties are poisonous for the solar industry," said Udo Mohrstedt, chief executive of Germany's IBC Solar. "These guarding measures will endanger more than 70,000 jobs in medium-sized companies in Germany alone," he said.
Link

Enrico Letta sera-t-il l'homme qui a fait bouger Angela Merkel ?

Mariano Rajoy et Enrico Letta se sont entendus sur la mise en place d'une "task force" commune en vue de présenter un plan de sortie de crise à la zone euro au sommet européen de juin prochain. A la suite de sa tournée européenne, le chef du gouvernement italien a su réunir derrière lui un front en vue de présenter une alternative à la gestion de la crise par Angela Merkel. Pour le chef du gouvernement italien, qui risque gros sur le plan interne, l'enjeu est majeur. Reste à convaincre une chancelière allemande en pleine campagne électorale de faire un geste...
Lire la suite ici.

David Cameron’s Conservatives suffer blows in UK local elections from anti-EU UKIP

David Cameron’s Conservatives took a drubbing in local elections amid a surge of support for an anti-European Union and anti-immigration party, heaping pressure on the British prime minister to appeal to the dissident right-wing of his own party. Echoing results across Europe, British voters appeared to punish the ruling government, fed up with economic doldrums and austerity measures. Britain’s nationalist party appeared to be the recipient of a sizeable protest vote against the political elite and the EU, analysts said.

According to returns Friday from 34 contests across England, the right-wing United Kingdom Independence Party, or UKIP, won 139 county council seats, while the mainstream opposition Labour Party gained 291. The Liberal Democrats — junior partners in Britain’s coalition government — were down 124 county council seats, while Cameron’s ruling Conservatives lost 335 seats in Thursday’s vote.

UKIP leader Nigel Farage — whose party Cameron once referred to as a bunch of “fruitcakes, loonies and closet racists” — said the results will send a “shock wave” through the British political establishment. “This is a real sea-change in British politics,” Farage told the BBC.

More...

ECB cuts interest rates, open to further action

The European Central Bank cut interest rates for the first time in 10 months on Thursday and held out the possibility of further policy action to support the recession-hit euro zone economy. Responding to a drop in euro zone inflation well below its target level and rising unemployment, the ECB lowered its main rate by a quarter percentage point to a record low 0.50 percent.

ECB President Mario Draghi, promising to provide as much liquidity as euro zone banks need well into next year and to help smaller companies get access to credit, also indicated that some policymakers had pushed for a bigger cut. "There was a very, very strong prevailing consensus towards an interest rate cut," he told a news conference after the ECB's Governing Council met in Bratislava. "Within that, there was a prevailing consensus for a cut of only 25 basis points."

Reuters

Italy’s new government wins 1st confidence vote

Italy’s new government easily passed its first confirmation vote Monday in Parliament after Premier Enrico Letta made concessions to his uneasy coalition allies, promising to ease part of a slate of austerity measures that have weighed on Italians impatient at the slow pace of economic recovery.

While pledging the country will do what the eurozone wants to improve its public finances and debt problem, the center-left leader has to placate his tense two-day-old coalition, including former premier Silvio Berlusconi’s conservatives, whose support he needs for confirmation. (...)

Bending in part to a key Berlusconi campaign promise, Letta said his government will immediately suspend an unpopular tax on primary residences due in June and make it fairer to less affluent taxpayers. He also pledged not to raise the sales tax and to reduce some payroll taxes. “Reducing taxes is a priority,” Letta said, promising he would “pinpoint a strategy to revive growth without interfering with the process to heal finances.”

The European Union has insisted on rigorous austerity to heal Italy’s finances, but the public’s patience has been tried by spending cuts and higher taxes. Voters across the continent have been rebelling against governments that have imposed such measures. While Letta stressed the urgency of reducing the tax burden on homeowners, consumers and businesses, he didn’t say how he planned to make up for the reduced revenues. He might have to resort to more spending cuts, which could ultimately sharpen an already harsh part of the austerity agendas. (...)

Intent on reassuring eurozone governments and European Union officials that despite his demanding coalition partners, Italy’s would stay the course of economic reform, Letta will soon visit major European capitals. He begins in Berlin on Tuesday, assuming his government wins the Senate confidence vote. He’ll also visit Paris and Brussels to give, as he put it, a “sign that this is a European and a pro-Europe government.”

He vowed to keep the sales tax from rising to 22 percent from 21 percent in July, as predecessor Mario Monti’s government had planned. Italy’s business sector is worried the higher tax would discourage consumers from buying everything from washing machines to new clothing. The new premier also pledged to reduce payroll taxes for businesses hiring the young or those currently on temporary work contracts.

Italy’s central bank said Monday that Italian companies were suffering ever more as loans dry up, with banks reluctant to make risky deals. Italians are impatient after 18 months of austerity budget, pension reform and new taxes under Monti to see jobs return and the small and medium firms that power the economy bounce back. Letta denounced the “anger and conflict” that the five-year economic slump has triggered.

On Sunday, an unemployed man shot and wounded two police officers Sunday in a crowded square outside the prime minister’s office at the same time the government was being sworn in elsewhere in the capital. 

The premier indicated his impatience with the political class’ failure to enact reforms. He indicated that he would give this legislature 18 months to make serious inroads or he might throw in the towel. However, virtually nobody expects the new government to last anywhere near Parliament’s five-year term.

WP

Euro-Area Economic Confidence Falls More Than Forecast

Economic confidence in the euro area decreased more than economists forecast in April as the 17- nation currency bloc struggled to emerge from a recession and the bailout of Cyprus renewed debt-crisis concerns.

An index of executive and consumer sentiment dropped to 88.6 from a revised 90.1 in March, the European Commission in Brussels said today. That’s the lowest since December. Economists had forecast a decline to 89.3, according to the median of 26 estimates in a Bloomberg News survey.

Business confidence and investor sentiment in Germany, Europe’s largest economy, dropped more than expected in April. European Central Bank President Mario Draghi said on April 19 that the economic situation in the bloc hadn’t improved since the beginning of the month. At the same time, Draghi expects the economy to recover from a recession later this year and economists forecast growth in the second quarter, a separate Bloomberg survey shows.

(...)

A gauge of sentiment among European manufacturers fell to minus 13.8 from minus 12.3 in March, today’s report showed. An indicator of services confidence dropped to minus 11.1 from minus 7, while consumer sentiment improved to minus 22.3 from minus 23.5.

With doubts about an economic recovery later this year growing, ECB policy makers have signaled they’re looking at a range of measures to boost growth, including cutting interest rates and a program to support lending to small and medium-sized companies. They are due to convene on May 2 in Bratislava for their monthly meeting.

“The flawed bailout in Cyprus has revived uncertainty in Europe,” said Annamaria Grimaldi, an economist at Intesa Sanpaolo SpA in Milan. “But I think the concerns are only temporary and we will see modest growth in the second half of this year.”

(...)

Link