Your browser version is outdated. We recommend that you update your browser to the latest version.

IMF suspends financial aid to Greece


By Guadalupe del Olmo

Posted on 29/12/2014

The International Monetary Fund has said it is suspending financial aid to Greece under its huge rescue programme until a new government is formed.

IMF spokesperson Gerry Rice said discussion on the completion of the sixth review of Greece's bailout will resume once a new government is in place.

Hellenic ParliamentHellenic ParliamentMr Rice added that the holdup in the programme would not impact the country's finances in the short term.

The decision comes after Greek lawmakers failed to elect a new president in a final round of voting.

It leaves the country facing an early election that could derail the international bailout programme it needs to keep paying its bills.

The only candidate in the race, former European Commissioner Stavros Dimas, matched the result achieved in the second round of voting before Christmas. However, he fell short of the 180 votes needed to become president.

Under Greek law, a parliamentary election must now be called, leaving financial markets and Greece's European Union partners facing weeks of uncertainty that could undermine fragile signs of economic recovery and derail its public finances. A general election is now expected to be held by early February.

German Finance Minister Wolfgang Schaeuble said Greece must stick to agreed economic reforms regardless of the outcome of the election.  

In a statement, Mr Shaeuble said "these tough reforms are bearing fruit, they have no alternative."

The radical leftist Syriza party, which wants to tear up Greece's bailout agreement with the EU and International Monetary Fund and wipe off a big part of its debt, has held a steady lead in opinion polls for months, although its advantage has narrowed in recent weeks.

Divisions among potential post-election coalition partners for both Syriza and Samaras' conservative New Democracy party have also complicated the outlook, increasing the risk that any new government would be short-lived.

Underlining the potential volatility facing markets, the main Athens stock market index accelerated losses to fall 10.7% after the vote, while Greek bond yields jumped above 9%.

Prime Minister Antonis Samaras urged lawmakers at the weekend to elect Mr Dimas to succeed the 85-year-old head of state Karolos Papoulias and allow the final round of bailout negotiations to be completed.

But having offered a deal to bring forward elections scheduled for mid 2016 to the end of next year, he ruled out new concessions and said he was confident of winning any election.

Mr Samaras, who had been pushing for an early end to the deeply unpopular bailout programme, brought forward the presidential vote earlier this month in a bid to end gathering political uncertainty hanging over his ruling coalition.

Syriza leader Alexis TsiprasSyriza leader Alexis Tsipras

A negotiating team from the "troika" of creditors from the EU, IMF and European Central Bank, had been due to resume talks in Athens next month to wind up the € 240 billion bailout and agree an interim, post-bailout programme.

In a bid to reassure international partners, Syriza leader Alexis Tsipras has sounded a more moderate tone recently, promising to keep Greece in the euro and negotiate an end to the bailout agreement rather than scrap it unilaterally.

But he has stuck to his promise to reverse many of the tough austerity measures imposed during the crisis, reversing cuts to the minimum wage, freezing state layoffs and halting the sale of state assets.


By Guadalupe del Olmo for EU Spectator




No nearer to an agreement on controversial Transatlantic Trade and Investment Partnership


By Guadalupe del Olmo

Posted on 09/12/2014

Despite a petition of over a million signatures against the controversial EU and US trade deal, the European Commission has refused to officially register the initiative... but should it ignore it?


The Transatlantic Trade and Investment Partnership (TTIP) is a proposed free trade agreement between the European Union and the United States of America. The EU claims that the agreement would result in multilateral economic growth, while critics say it would increase corporate power and make it more difficult for governments to regulate markets for the public benefit.


Campaigners against the agreement warn that the Investor State Dispute Settlement (ISDS) clause could lead to governments being at the mercy of wealthy corporations, as it allows firms to sue authorities for compensation over policies that adversely affect them. France and Germany have already shown their opposition to the inclusion of an ISDS in the negotiations.

The overall process between the EU and the US has been marked by its of lack of transparency, however the negotiators insist that all negotiating issues of the EU proposal will be made public.

Especially after EU Trade Commissioner, Cecilia Malmström announced the TTIP “transparency initiative” communication last week. However, negotiators consider that certain issues need to remain confidential to allow reconciliation on both sides.EU Trade Commissioner, Cecilia MalmströmEU Trade Commissioner, Cecilia Malmström

She expressed in an interview with De Tijd - her surprise regarding scepticism on the contentious issue of the TTIP. She wants EU citizens to know that the talks are not secret, but she says she cannot negotiate with the USA in front of TV cameras. Ms Malmström explained that 30 million European jobs depend on international trade, most of them well-paid. The next round of TTIP negotiations will start in February. She adds the EC is currently analysing the results of a consultation held online about ISDS. The consultation remains just that, a consultation, and its results are not those of a referendum, she concludes.

Currently, the European Commission is in discussion with the European Parliament on how to define the way for the texts to be accessible to all MEPs, that for the moment, must remain confidential.

The EC argues that there will be no relaxation on protection of existing standards, as any agreement negotiated by the Commission will also have to be agreed by all Member States and ratified by the European Parliament, the latter will never accept any lowering of standards established by European legislation.

Picture: Corporate Europe Observatory ©Picture: Corporate Europe Observatory ©

Britain's Prime Minister David Cameron is pledging support for the EU-US trade deal, which could boost the UK economy by up to € 12.5 billion a year.  Meanwhile, the British public is concerned that the proposed partnership could result in the NHS being sold off to US companies, and being forced to appease major medical and pharmaceutical companies. However, the EC insist that the liberalization of public services is not on the negotiation table.

Even if the terms of the agreement have not yet seen the light of day, controversy and concerns are on the rise and delay the negotiations.

For the time being, Washington is observing the whole process with impatience, after all, the agreement should be concluded before the US elections in 2016 or risk not be concluded at all.


By Guadalupe del Olmo for EU Spectator



Euro zone morale improves in December on prospect of ECB money-printing

Posted on 08/12/2014

Sentiment in the euro zone picked up in December as investors took a brighter view of the future, probably due to expectations that the European Central Bank (ECB) will start buying assets next year.

Sentix research group's index tracking morale among investors in the euro zone climbed to -2.5 in December from -11.9 the previous month.

This was much better than the -10.5 forecast in a Reuters poll.Picture: European Commission ©Picture: European Commission ©

The rise was driven by the third-strongest increase in investor expectations in the index's 12-year history to 12 from their November reading of -2.

ECB President Mario Draghi said last week that the Euro zone's central bank would decide early next year whether to take further action to revive the bloc's economy.

"His de-facto announcement of broad-based security purchase programme is probably the main reason why investors' expectations for the coming six months have improved so dramatically," Sentix said.

The ECB has set itself a goal of expanding its balance sheet - buying assets from banks and others in return for cash it hopes will be pushed into the economy - by up to € 800 billion or even €1 trillion.

Today's Sentix survey showed investors' perception of the current economic situation improved in December but remained in negative territory.

A sub-index tracking sentiment in Germany surged to 19.6 in December from 9.8 in November, with Sentix pointing out that a weak euro is helping Germany, a traditionally export-oriented economy, while consumers and companies are benefitting from lower oil prices.



EU Parliament approves motion to break up Google

Posted on 27/11/2014

The European Parliament has overwhelmingly backed a motion today urging competition regulators to break up Google. This is the latest setback for the world's most popular search engine.


Since 2010, Google has been in the EU's regulatory sights, and is grappling with privacy issues, requests to scrub search results to comply with a court ruling, copyright concerns and tax controversies.

The non-binding resolution in the European Parliament is the strongest public signal yet of Europe's concern with the growing power of US tech giants. It was passed with 384 votes for and 174 against.

Andreas Schwab, German lawmaker and co-sponsor of the bill, said “it is a political signal to the European Commission, which is tasked with ensuring a level playing field for business across the 28-country bloc.”

"Monopolies in whatever market have never been useful, neither for consumers nor for the companies," he said.

Mr Schwab said he had nothing against Google, adding that he was a regular user. "I use Google every day," he stated.

Google has thus far offer no comment on the vote results.

Margrethe Vestager , European Competition Commissioner,  has said she will review the case and talk to complainants before deciding on the next step.

Margrethe Vestager, European Competition Commissioner,  Margrethe Vestager, European Competition Commissioner,

Her predecessor (Joaquín Almunia) rejected three attempts by the company to settle complaints that it unfairly demoted rival services and stave off a possible fine of up to € 4 billion.

Today's resolution did not mention Google or any specific search engine, though Google is by far the dominant provider of such services in Europe with an estimated 90% market share.

The European Parliament called on the Commission to consider proposals to unbundle search engines from other commercial services.

Google is the target of a four-year investigation by the Commission, triggered by complaints from Microsoft, Expedia, European publishers and others.

Lobbying group Computer & Communications Industry Association, whose members include Google, eBay, Facebook, Microsoft and Samsung, said unbundling was an "extreme and unworkable" solution that made no sense in rapidly changing online markets.

"While clearly targeting Google, the Parliament is in fact suggesting all search companies, or online companies with a search facility, may need to be separated. This is of great concern as we try to create a digital single market," the Parliament claimed.

EU Spectator correspondent





Dramatic rescue of Euro Zone called for by Mario Draghi

Posted 22/11/2014

European Central Bank President Mario Draghi today threw the door wide open for more dramatic action to rescue the euro zone economy, saying "excessively low" inflation had to be raised quickly by whatever means necessary.

Draghi said there was now no sign of economic improvement in the months ahead.

He added that the ECB would expand and step up its programme to pump more money into the currency bloc if its current measures fell short of lifting inflation.

"We will continue to meet our responsibility - we will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us" Draghi said in a speech at an annual banking congress.



"If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialise, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases" the ECB chief said.

Draghi had said on Monday that further measures could involve large-scale purchases of government bonds, also known as quantitative easing.

This move is particularly opposed in the bloc's largest economy, Germany, for fear of mutualising risks. The head of Germany's powerful Bundesbank, Jens Weidmann, in his speech at the same event, avoided the subject of monetary policy and instead spoke about banking regulation. "We can't be constantly commenting on one another" Weidmann said.

Draghi's remarks were almost as dramatic as his "whatever it takes" speech in the summer of 2012 with which he pulled the euro zone back from the brink.

Having earlier in the week pointed to early signs of improvements, Draghi today said the economic situation remained difficult and the latest business survey suggested a stronger recovery was unlikely in the coming months.

"Over shorter horizons, however, indicators have been declining to levels that I would deem excessively low" he said.

The euro zone economy has been mired in low growth and weak inflation for months.

The ECB is trying to unblock lending to households and companies by flooding the market with billion of euros through purchases of securitised private debt.

But should these not be enough to bring inflation - now at 0.4% - back to its medium-term target of just below 2%, Draghi said the ECB would recalibrate the size, pace and composition of our purchases as necessary.

"This is why the Governing Council has tasked ECB staff and the relevant Eurosystem committees with ensuring the timely preparation of further measures to be implemented, if needed" he stated.

This could include the purchasing of sovereign bonds.The ECB would be the last of the world's major central banks to deploy quantitative easing, though several policymakers have raised concern that the costs of such a tool would outweigh the benefits.

Borrowing costs of euro zone governments have fallen to record lows since Draghi's 2012 speech, which leads some observers to doubt the impact of quantitative easing (QE) in the euro zone because one key QE effect would be to weigh on long-term interest rates.

Draghi acknowledged the different financial structures in the euro zone, Japan and the US, but stressed QE may still have an effect via the currency channel as banks would be expected to shift into assets outside the euro zone.



Euro zone business growth slower than predicted

Posted 20/11/2014

Euro zone business growth has been weaker than any forecaster expected this month and new orders have fallen for the first time in more than a year despite further price-cutting, a survey showed today.

Markit's Composite Flash Purchasing Managers' Index fell to 51.4, missing even the lowest forecast in a Reuters poll.

The index is based on surveys of thousands of companies in the euro zone and is seen as a good growth indicator.

This is going to be a huge disappointment for the European Central Bank. “This is the euro zone more or less just continuing to stagnate, a renewed downturn is an increasing likelihood," said Chris Williamson, survey compiler Markit's chief economist.

A PMI covering the dominant service industry also missed all predictions in the poll by falling to 51.3, while the factory PMI's dip to 50.4 missed the median forecast.

However, they did hold above the 50 mark that separates growth from contraction.

Williamson said the PMI pointed to 0.1-0.2% GDP growth in the current quarter, compared with the 0.2% forecast in a Reuters poll taken last week.

Forward-looking economic indicators suggest the situation is unlikely to improve anytime soon.

The composite new orders index fell to 49.9, its first time below 50 since July 2013, and factories, who barely increased staffing levels, ran down old orders faster than last month - the related subindex fell to 48.3.

"It's signalling a downturn in demand, firms are eating into existing orders to maintain any growth. You would like to think with the measure the ECB has taken that you would see the numbers moving higher, but we're moving in the wrong direction," Williamson said.

Also of concern to the ECB, which is facing the spectre of deflation, was the fact that service firms cut prices again. The sub-index did rise to 46.9 from October's 56-month low but has remained firmly below the breakeven 50 mark since late 2011.

Prices rose just 0.4% in the euro zone in October, well below the ECB's target of close to but below 2% and deep in what it terms the "danger zone".

To keep the euro zone from slipping into deflation, the ECB has been pumping money into the banking system by buying covered bonds and offering long-term loans.

A Reuters poll suggested there is now a 50-50 chance that it will take the plunge and begin buying sovereign bonds.



Ireland to top euro zone growth table this year

Posted 04/11/14

Ireland will be the fastest growing economy in the European Union this year according to the European Commission’s autumn economic forecast.

Photo: Courtesy of The Guardian

The Irish growth rate is expected to be 4.6% compared to an EU average of 1.3% and a euro zone average of 0.8%. It is also in line with the most recent Government forecasts of 4.7% for 2014 and 3.9% for 2015.

The surge in growth has taken EU officials by surprise, since the Commission’s spring forecast predicted a growth rate of just 1.7%.

The Commission has also acknowledged that despite the tax cuts and spending increases in the October Budget, Ireland’s budget deficit should fall to 2.9% next year. The forecast also suggests that the national debt will fall to 106% of GDP in 2016, down from 123.3% of GDP in 2013.

Ireland is decoupling from the euro area, as its recovery broadens and gathers firm momentum, and this robust and faster-than-expected expansion should bolster government revenues and facilitate a reduction of the deficit”, the Commission said in its autumn forecast.

Today’s forecast shows that Irish and foreign-owned companies are starting to invest again, and it also noted an increase in domestic consumption.

European officials warned that the 4.6% growth rate for 2014 may include some export phenomena and “noise” due to particular aspects of the Irish export sector. For example; the presence of enormous multinationals in the Irish economy is thought to cause volatility in quarterly growth figures, since one huge company could cause a sharp increase in the growth rate if it announces its figures in one quarter over another.

Meanwhile, the EU has sharply cut its growth forecasts for the euro zone as a whole, warning that France and Italy remain huge problems for the sluggish European economy.

The EU has predicted that output in the euro zone will grow by only 0.8% this year, instead of the earlier prediction of 1.2%. The growth outlook for 2015 is also much lower, cut down to 1.1% from an earlier forecast of 1.7%.

Up to 25 European banks have failed ECB comprehensive Assessment 


Posted on 26/10/2014

The European Central Bank has today published,  Sunday 26 October 2014, the results of the comprehensive assessment, the results of a thorough year-long examination of the resilience and positions of the 130 largest banks in the euro area as of 31 December 2013.

This unprecedented in-depth review of the largest banks’ positions will boost public confidence in the banking sector. By identifying problems and risks, it will help repair balance sheets and make the banks more resilient and robust. This should facilitate more lending in Europe, which will help economic growth.

The comprehensive assessment—which consisted of the asset quality review (AQR) and a forward-looking stress test of the banks—found a capital shortfall of €25 billion at 25 banks. Twelve of the 25 banks have already covered their capital shortfall by increasing their capital by €15 billion in 2014. Banks with shortfalls must prepare capital plans within two weeks of the announcement of the results. The banks will have up to nine months to cover the capital shortfall.

Up to 25 banks in the euro area have failed the test including nine Italian institutions, being Italy with more institutions not passing the assessment. The adopted threshold is 8% capital ratio of highest quality after the first phase, asset quality, and 8% in the base scenario. To pass the adverse scenario, the minimum capital is 5.5%. All institutions that didn't meet these parameters are suspended and had capital requirements, although some strengthened their capital throughout 2014. There are 13 institutions still require injections.

List of EU Banks that failed ECB's comprehensive Assessment


MONTE DEI PASCHI DI SIENA with a capital need of over 2 billion

BANCA CARIGE with a capital need of € 810 million

BANCA VENETO with a capital need of € 710 million

BANCO POPOLARE with a capital need of over € 690 million

BANCO POPOLARE DI MILANO with a capital need of over € 170 million

BANCA POPOLARE DI VICENZA with a capital need of over € 220 million

BANCA POPOLARE DELL'EMILIA ROMAGNA its capital gap of € 130 million has been already covered

CREDITO VALTELLINESE its capital gap of € 380 million has been already covered

BANCA POPOLARE DI SONDRIO its capital gap of € 320 million has been already covered


EUROBANK with a capital need of over  € 1.7 billion

GREECE NATIONAL BANK with a capital need of € 930 million

PIRAEUS BANK its capital gap of € 660 million has been already covered


HELLENIC BANK with a capital need of € 180 million

CENTRAL COOPERATIVE BANK its capital gap of € 1.7 billion has been already covered

CYPRUS BANK BANK its capital gap of € 920 million has been already covered


 PERMANENT TSB with a capital need of € 850 million


 PORTUGAL COMMERCIAL BANK (BCP) with a capital need of more than € 1.1 billion


 OESTERREICHISCHER VOLKS with a capital need of € 860 million


DEXIA with a capital need of € 340 million

AXA BANK EUROPE its capital gap of € 200 million has been already covered


 CAISSE DE REFINANCEMENT DE L'HABITAT its capital gap of € 130 million has been already covered


 MÜNCHENER HYPOTHEKENBANK its capital gap of € 230 million has been already covered



NOVA LJUBLJANSKA BANKA with a capital need of € 30 million

BANKA MARIBOR with a capital need of € 30 million



LIBERBANK its capital gap of € 30 million has been already covered



Big EU banks to pay most into bailout fund


Posted 22/10/2014

Michel BarnierMichel BarnierCommissioner Michel Barnier presented two draft laws that ease the conditions of the planned European banking resolution fund.

According to a distribution approved yesterday by the European Commission, Europe's major banks will stump up 90% of the €55 billion value of the new euro-area banking resolution fund. 

The French banking sector in which three big groups are dominant (SocGen, ΒΝΡ Paribas, Credit Agricole) will contribute €17 billion (30% of the total amount within 8 years), while German banks will pay some €15 billion (27%). The Commission’s method takes the size of banks and their risk profile into account, adding that even though the Commission did not publish a country-by-country or bank-by-bank detail of the bill, the French and German banking sectors are bound to be the largest contributors.

The plans lean more heavily on France's big banks and favour the hundreds of small and medium-sized lenders in Germany and Spain. The European Parliament and the EU Council now have three months in which to submit objections to the criteria, adding that Commissioner Barnier called the Commission's approach “fair” and “proportionate.”

Photo: European Commission ©



Third Meeting of the European Parliament of Enterprises


Posted 16/10/2014


Photo: European Parliament ©Photo: European Parliament ©The European Parliament of Enterprises (EPE), EUROCHAMBRES brought together over 750 business men and women, coming from 45 European countries giving them the chance to 'become' Members of the European Parliament for one day, debating and voting on some of the most crucial topics currently at the heart of the political debate. Martin Schulz, president of the European Parliament attended the meeting, which was celebrated on the premises of the European Parliament in Brussels.



The sessions of this edition of the EPE focused on internationalisation, skills, finance and energy. The results of the votes will be presented by EUROCHAMBRES to the relevant political interlocutors from all the EU institutions as "the voice of European businesses”.

  On the subject of internationalization, presented by Christoph Leitl, Chairman of Global Chamber Platform (GCP), the enterprises representatives agreed that to remain competitive, it is essential that EU business seizes the opportunities from this external growth. For this purpose, the European Institutions, could help in three ways.  The first proposal focused on progress needed to conclude ambitious trade agreements with key partners like the US, India, Mercosur or China. Secondly, with only 13% of SMEs engaged in international trade (outside the EU), participants concluded that further internationalisation efforts are needed. And finally, the session concentrated on the needs a stronger European voice in representing and defending our European enterprises economic interests in third markets, for which, a genuine European Economic Diplomacy should be developed.

  Photo: European Parliament ©




The European Commission approves the acquisition of WhatsApp by Facebook

Posted on 03/10/2014

The proposed acquisition of WhatsApp Inc. by Facebook, Inc. both of the United States has been authorised by the European Commission, under the EU Merger Regulation. Facebook (via Facebook Messenger) and WhatsApp both offer applications for smartphones or "apps" which allow consumers to communicate by sending text, photo, voice and video messages. The Commission found that Facebook Messenger and WhatsApp are not close competitors and that consumers would continue to have a wide choice of alternative consumer communications apps after the transaction. Although consumer communications apps are characterised by network effects, the investigation showed that the merged entity would continue to face sufficient competition after the merger.


Commission Vice President in charge of competition policy, Joaquín Almunia, said: “Consumer communications apps keep European citizens connected and are becoming increasingly popular. While Facebook Messenger and WhatsApp are two of the most popular apps, most people use more than one communications app. We have carefully reviewed this proposed acquisition and come to the conclusion that it would not hamper competition in this dynamic and growing market. Consumers will continue to have a wide choice of consumer communications apps."

More information

 Photo: European Commission ©