EC: Annual Growth Survey

A lot of material was published today by the DG FIN in the European Commission including the 2014 Annual Growth Survey and the 2014 Alert Mechanism Report.  These and other documents can be accessed here.

17 replies on “EC: Annual Growth Survey”

The technicity of the exercise risks overwhelming the political message.

To quote Peter Bofinger of the German Council of Economic Advisers in a laudable dissenting note to the recent report of his colleagues, “The others say it is a market outcome so there’s no problem. I don’t agree”.

Neither does anyone with any capacity for critical observation of the facts.

It is a very welcome development that the parties to the current coalition negotiations in Germany appear to have such a capacity.

Correct pertinent second link.

And now a mea culpa from one of the UK negotiators at the time of Enlargement who confused standard UK policy dogma with the reality of the situation in the matter of free movement.

Not that Labour was wrong. Far from it! The error lay in allowing, as one of the major players, as part of the negotiations, the two countries that benefited most from Enlargement – Germany and Austria – to avail of the full seven year derogation and to be the last to introduce unfettered free movement as required by the treaties.

Olli Rehn’s Blog:

It reads like a sleveen’s supplicant to a landlord.

The commission elders, Rehn and Barroso, are positioning themselves on the right side of the shifting tide;
‘There go my people, I must follow them’.

Pupils of the ‘economics for slow learners’ class.

It was perfectly obvious from the outset that Germany was having a wonderful crisis. The past five years have been devoted to collecting the harvest; at everybody else expense.

“José Manuel Barroso has launched an inquiry into whether Germany’s large current account surplus is harming the European economy, drawing Brussels into a heated debate over Berlin’s role in global economic health…
The latest infighting was spurred by last month’s US Treasury attack on Germany’s current account surplus. Olli Rehn, the commission’s economic chief, said he lamented the “excessive politicisation” of the issue, and hinted Washington had been seeking to deflect criticism from its own fiscal brinkmanship and shifting monetary policy. “


“It is a very welcome development that the parties to the current coalition negotiations in Germany appear to have such a capacity.”


Expect little in the way of radical change at EU level from your ordo_liberal fellow travellers:

Tepid Talks: A Coalition Devoid of Vision

The coalition taking shape in Berlin between Chancellor Angela Merkel’s conservatives and the center-left Social Democrats will have a huge majority in parliament. But the halfhearted discussion that’s gone on so far suggests that the government won’t tackle big projects — and Merkel is to blame.

Banking Union anyone?

Francis ‘De Dub’ Bacon’s tryptich of L. Freud sold for ~$140 million. His ‘chaotic’ room is available to view at the Hugh Lane ….

growth? Debt is the issue – Some good stuff from Michael Taft

Breaking the Link Once and for All
November 8, 2013, Michael Taft

Day by day it gets weirder. First, the EU commits itself to breaking the link between banking and state debt. This was described as a ‘game-changer’ and led some in Ireland to believe that not only would future bank debt be borne by someone else, but that same someone else would also repay us for our past bank debts. Oh, happy days.

But recent announcements suggest that just the opposite. The ECB states that where banks fail the upcoming stress tests and they cannot raise capital in the markets, then national governments will have to pick up the tab. And now an argument is being put about some European capitals that the European Stability Mechanism will only be a last resort for countries with bank debt problems – only after individual governments have come up with the money. All this means that national governments will still be responsible for their own banks’ debt and capitalisation requirements; and if they get into fiscal trouble, they can use the ESM as a . . . bail-out mechanism.

So breaking the link between banking and state debt may end up strengthening that link. This is what passes for common-sense in the Eurozone.

[…] The responsibility for paying for this crisis lies with those sectors that created the crisis. And this crisis started, and continues, in the financial sector. It has had a devastating impact on the productive economy and public balance sheets. To break the link means putting the responsibility back where it belongs – where it originated.

“The ECB states that where banks fail the upcoming stress tests and they cannot raise capital in the markets, then national governments will have to pick up the tab”

Until the markets dump Piggy debt again and we have another midnight panic decision. The beauty of power is the fully credible U-turn when it really matters.

@DoD/ Seafoid

If this report is accurate then it’s time to worry if you have savings…..

“Berlin wants the rules available for next year’s ECB health checks, allowing losses on bondholders or large depositors of banks with skeletons in their closet.

“I hope that serious investors know what they are investing in,” said Gunnar Hokmark, a member of the European Parliament who plays a central role in shaping the new law.

“Everything is to be seen as bail-in-able. Depositors are, in the end, bail-in-able. If anyone would be surprised by that, they have been away from the debate for quite a long time.”

Originally pencilled in for 2018, these rules will be finalised and possibly accelerated by EU countries and the parliament in the coming weeks. “

Why ever would you want a LOC with any conditionality attached. If things turn really ugly, which they will then the presses will be cranked up to save the day. Or the Porcines leave the Euro and default.

If things turn really ugly……will Jens let go of the control panel on the printing press?

Larry Elliott in the Guardian

‘Germany and France hold back eurozone’s fledgling recovery’

“As a result, the euro’s lost decade will drag on and on. The existential threat to the euro has been removed by Mario Draghi’s insistence that the ECB will do all it takes to secure the future of the euro. But if saving the single currency means permanent austerity, sky-high unemployment and a relentless squeeze on living standards, sooner or later Europe’s citizens will wonder what exactly it has been saved for.”

Funny that the EU narrative here is that a “sustainable recovery” is underway. Then we see reports today and yesterday that Germany GDP growth is “waning”‘ while France’s continues to decline.

If optimism is repeated enough, eventually it may be justified. Interesting however to see Prof Honohan today saying that he is not overly optimistic about economic prospects in the foreseeable future……does that mean that Irish economic forecasting will be more reliable going forward? Current growth of 0.1%…..versus 2.4% projection for 2014… that right? How so? Interesting too that he believes that the Irish banks will require more capital.

Then one sees Michael Noonan saying that the banks will not need more capital on the basis that Irish property prices have “improved”…..

Fun and games.

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