European Commission President Jose Manuel Barroso has said Britain's position on a future EU treaty on financial regulation posed a "risk to the integrity of the single market". He was speaking at a meeting of the European Parliament on Tuesday morning, the first meeting of the Parliament to discuss the failure of talks last week to secure an EU-wide treaty.
Describing David Cameron's veto of the treaty as "unfortunate", Mr. Barroso warned that Europe faced a long road ahead to reach a deal which would satisfy all the Eurozone countries.
"Personally, I made every possible effort to agree this fiscal compact fully within the current treaties," he said. "This approach required that all 27 member states played their part. As you know, one member state was opposed to amending the Lisbon treaty."
Some MEPs have given more harsh criticism of David Cameron's position. One French MEP said "26 of the 27 states have shown responsibility", adding that the Prime Minister should be reminded that he has "obligations" to introduce greater financial regulation.
However some MEPs criticised the European Commission for trying to push for a treaty across the whole EU to rescue the Euro in the first place, and UKIP leader Nigel Farage told the EU Parliament that Europe was the Titanic, and Britain's was in a lifeboat.
"Britain is going to make the great escape", he told MEPs, to scattered applause. "Cameron does not know what he has unleashed," he added, suggesting that a process had now started which would lead to a referendum on whether Britain should leave the European Union.
Huffpost UK is following what looks like being a stormy session of the European Parliament with live updates below. The meeting comes as British cabinet ministers are meeting for the first time since Cameron vetoed the EU-wide treaty, a day after Nick Clegg decided to skip a Commons statement and debate on the failure of the talks last week.
13/12/2011 23:34 GMT
European Commission President Blasts United Kingdom's Treaty Change Veto
Jose Manuel Barroso, president of the European Commission, condemned the United Kingdom's veto of a European Union treaty change as self-serving because Prime Minister David Cameron had sought protections from regulations for the United Kingdom's financial industry, according to The New York Times.
"This made compromise impossible," Mr. Barroso told the European Parliament in Strasbourg, France, according to The New York Times. "All other heads of government were left with the choice between paying this price or moving ahead without the U.K.'s participation and accepting an internal agreement among them."
13/12/2011 23:27 GMT
Spain Successfully Sells Government Debt
The Spanish government successfully sold $6.51 billion in Treasury bills on Tuesday, above its target range, according to The Wall Street Journal. Bids for Spanish government debt totaled $23.8 billion, or 3.66 times more than the amount of debt sold. Borrowing costs for Spain fell as a result.
13/12/2011 22:55 GMT
Eurozone Banks Flee From Eastern Europe
Eurozone banks, which once flocked to Eastern Europe for revenue opportunities, now are fleeing the region to focus on their domestic economies, according to The Wall Street Journal.
Experts fear that Eastern Europe, even though it has mostly avoided the euro, still will go through a recession because of the pullback in lending, according to the WSJ. Germany's Commerzbank and Italy's UniCredit, two of Europe's largest banks, said they plan to scale back their Eastern European operations, which previously were a priority.
"At the very least, this means that credit growth in Eastern Europe will remain very weak," Neil Shearing, chief emerging-markets economist at Capital Economics in London, told the WSJ. "But I think there's a sizable and underappreciated risk of a new credit crunch."
13/12/2011 22:42 GMT
Large Greek Bank To Seek Government Bailout: Report
The National Bank of Greece, the country's leading quality lender, said on Tuesday that it will seek approval from its shareholders to ask for a $1.3 billion bailout from the Greek government, according to Dow Jones Newswires.
It appears that the crisis may be resulting in a vicious cycle: As the Greek government has its debt written down, banks lose money and need a government bailout, which further devalues the government's debt and hurts bank balance sheets even more.
From Dow Jones Newswires:
Already reeling from a slumping economy, rising non-performing loans and steady outflow of deposits, Greece's banks are facing huge losses from a planned debt write down the government is negotiating with its private sector creditors.
In a report issued earlier Tuesday, the IMF estimated Greece's top six lenders will require a total capital boost of up to EUR17 billion to cope with the debt write-down.
13/12/2011 22:31 GMT
Europe Must Invest In Jobs For Young People: OECD
Researchers at the Organization for Economic Cooperation and Development (OECD) have called on European leaders to invest in jobs for young people and economic growth as a whole in order to prevent a long-term drag on growth, according to Reuters. Youth unemployment across the European Union averages 20 percent, ranging as high as 45 percent in Spain to 7 percent in the Netherlands, according to Reuters.
"It's an investment for the present, an investment for the future," said Stefano Scarpetta, deputy director of the OECD's employment division, in Paris, according to Reuters.
13/12/2011 22:29 GMT
Major French Bank To Cut Up To 2,000 Jobs: Report
Credit Agricole, one of France's largest banks, plans to cut up to 2,000 jobs, according to a French newspaper article cited by Reuters.
Credit Agricole, which is emulating similar moves by BNP Paribas (BNPP.PA) and Societe Generale (SOGN.PA), is in the early stages of an overhaul under new Chief Executive Jean-Paul Chifflet, who has espoused a back-to-basics retail banking strategy at odds with his predecessor's ambitions to make the bank a major global player in financial markets...
With credit markets virtually closed to euro zone banks, all French lenders have announced cutbacks in lending to slash debt and wean themselves off once-cheap wholesale funding, especially in U.S. dollars.
13/12/2011 21:57 GMT
Eurozone Crisis Could Cause Credit Crunch In United Kingdom: Bank Of England
The crisis in the eurozone could cause a credit crunch in the United Kingdom, said Spencer Dale, the Bank of England's chief economist, in an interview with Bloomberg TV on Tuesday.
"U.K. banks haven't been able to issue unsecured term debt for most of the second half of this year," he said. Dale added that if funding markets do not open again, "there’s a real risk that credit conditions in our economy could tighten further."
That means it could become 2008 all over again, Bloomberg TV noted.
13/12/2011 21:56 GMT
U.S. Stock Markets Close Lower
After the Federal Reserve announced no major new moves, U.S. stock markets plunged and closed lower on Tuesday, Reuters reports.
The S&P 500 fell 0.87 percent, and the Dow Jones Industrial Average fell 0.55 percent, or 66.45 points. The NASDAQ closed 1.26 percent lower.
13/12/2011 21:37 GMT
Credit Crunch In Europe Materializes
A credit crunch is beginning to materialize in Europe.
Eurozone banks had deposited $453.5 billion at the European Central Bank by Monday night, the highest level since June of 2010, highlighting that eurozone banks are shunning lending to each other, according to The Financial Times.
European banks also are relying more heavily on the ECB's emergency funding system, according to the FT.
"The financial system is no longer functioning properly. Very few banks can get short-term loans in the private markets. It is only a handful of the very biggest and strongest banks that can," one trader told the FT.
13/12/2011 21:36 GMT
Greek Debt Talks Delayed
Negotiations between the Greek government and private holders of Greek government debt have delayed their talks on reducing the value of their holdings in Greek debt by 50 percent, which is delaying a $170 billion European bailout package for Greece, The Financial Times reports.
The article said that private bondholders, which are largely European banks, are demanding that government bondholders take the same haircut on their Greek debt, that the interest rates be high, and that the new Greek government bonds be governed by British law so that the Greek government cannot unilaterally reduce their payments in the future. Both sides are using delays to the talks as a strategy to strengthen their negotiating position.
From The Financial Times article:
“We expected to complete on the bonds in December, now it’s looking like February,” said one official....
“If that is true about February, we are headed for a bad end. Markets need confirmation of an agreement by early January,“ the person said, pointing to another visit to Athens by EU and IMF officials in mid-January.
An IMF staff report published on Tuesday said that the protracted negotiations over restructuring sovereign debt had worsened market conditions.
"The drawn-out debt restructuring discussions have taken a toll on market sentiment and ratcheted up pressure on the banking system (which is heavily exposed to sovereign bonds)," the report said.