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Posts Tagged ‘Europe’

Scrap the FTT, have a Bourse Tax instead

January 20, 2012 1 comment

At 10.53 on 20th January 2012, the Telegraph reported on their live blog:

10.53 A German Government spokesman says that an EU-wide financial transaction tax is still the goal, but that there may be a possible bridge with the UK via a bourse tax.

What is a bourse tax?

Frankly, I have no idea beyond speculating that it’s a tax on transactions within a stock exchange. A bourse is an organized market where tradable securities, commodities, foreign exchange, futures, and options contracts are sold and bought. The very things which would be taxed under a FTT anyway.

The fact that it is limited to the individual exchanges would mean that it is an attractive deal to the British. However it does raise complications, considering that the largest Pan-European exchange, Euronext, merged with NYSE in 2007. Another large European exchange, OMX is a Scandinavian exchange with activities in Norway. Confining finance and the taxation of finance to the Eurozone will only create more problems than solutions.

However, with the smaller exchanges, such as the Deutsche Boerse, this confinement could happen without angering any non-eurozone interests.

Don’t be fooled by Eurosceptic ‘libertarians’…

December 23, 2011 Leave a comment

…as they are just xenophobes.

This applies aptly to the Tory right and UKIP. Some might be theoretically libertarians but by calling for a withdrawal from the EU they cannot call themselves libertarians in practice.

The EU guarantees free trade, the basis for a free market, across member states. Freedom of movement for goods, capital and, most importantly, people.

Any renegotiation of Britain’s membership would precede the removal of these important contributing factors to the British economy.  Britain would become an isolated island with an increasingly discriminatory immigration system.

The EU is not perfect. Any one who says otherwise is deluded. However, it does lay an important foundation for the liberalisation of a global economy. The future of make-up of the world economy will likely be based on political and economic blocs – like the EU is. Like the USA technically is.

Once this shift has occurred free trade can take place between the blocs. It won’t happen in for a long time, but it will happen based on ongoing political and economic trends of co-operation at a supra-national level.

The right wing wish to prohibit this trend. A protectionist measure in the name of freedom.

 

No fun in Italy

December 22, 2011 Leave a comment

Italy’s €33bn austerity programme is as follows:

• Property tax on first homes, increase on taxes for second and third houses.

• A 2 percentage point hike in VAT from October next year.

• Tax on money brought back to Italy under “shields” for tax evaders.

• Tax on bank accounts, shares and financial instruments.

• Increase in excise duty on petrol.

• Taxes increased on luxury assets such as boats, private aeroplanes and sports cars.

• Cuts to funding for city councils of €1.45 billion per year.

• Minimum retirement age for womens’ pensions raised to 62 from 60. Mens’ minimum retirement age to rise to 66 from 65

Categories: Economy, Europe Tags: , , , ,

Retort to the Telegraph

November 18, 2011 Leave a comment

On Friday, The Telegraph ‘reported’ on “Germany’s secret plans to derail a British referendum on the EU”. The plans aren’t that secret. The think tank, Open Europe, has provided an English translation of the document, entitled:  The future of the EU: Necessary integration policies for progress towards establishing a Stability union.

The document itself mainly concerns itself with changes to Article 126 of The Treaty of the Functioning of the European Union. Article_126 is largely about maintaining a resemblance of balanced budgets amongst member states.

The document proposes that paragraph 10 of Article 126 be deleted. Paragraph 10 states “The rights to bring actions provided for in Articles 258 and 259 may not be exercised within the framework of paragraphs 1 to 9 of this Article.”

Article 258 and Article 259 deal with legal proceedings being brought against a member state by either another member state or the Commission if a Treaty is deemed to have been broken.  This would allow direct intervention into the affairs of the offending member state by the Commission or, in this case, a European ‘Stability Commissioner’.

The crux of The Telegraph’s argument comes as a note at the bottom of the penultimate page.

“Limiting the effect of the treaty changes to the Eurozone states would make ratification easier, which would nevertheless be required by all EU member states (thereby less referenda could be necessary, which could also affect the UK).”

The proposals in the document are a change to a part of a treaty which only affects Eurozone members. However, as all treaties have to be ratified by members of the EU Britain would need to ratify the changes. The changes would only affect Britain if it were to join the Eurozone.

I recall the public being offered a referendum on Britain’s continued membership of the EU if there was a fundamental treaty change which affected its relationship with Europe. This proposed treaty change doesn’t affect Britain in the slightest.

The ECB won’t save the day, but Germany might

November 14, 2011 1 comment

As things stand in the Eurozone the European Central Bank (ECB) is incapable of providing the much needed status of Lender of Last Resort. It is prohibited from printing money by the Maastricht Treaty, but it is able to buy government bonds as part of its function to maintain price stability. As had been experienced last week when there was a run on Italian and Spanish bonds, the ECB bought bonds to force the price down, and thus stable (for a short period of time).

As has been pointed out by Paul Krugman, the crisis that is currently striking the Eurozone is a result of an imbalance of payments. Germany, thus, needs to spend. It’s very rarely that I praise George Osborne, but he has said:

“If you think of currency unions, here in the United Kingdom or in the United States, we do transfer money around the country in order to try and get greater equality in the economy. I’m afraid that needs to happen in the euro, because we are not there yet and the instability is having a huge effect.”

This is crucial for the survival of the Euro. A monetary union requires a fluid movement of capital across the union. So far, the Euro has been a disappoint. A monetary union without the necessary sacrifices to make it work. I believe it has only worked through a series of fortunate circumstances, such as a prolonged period of growth. 2008/9 was the the first time the Eurozone had experienced a recession in its 10 plus year history. Now that a sovereign debt crisis has struck the southern economies of Greece, Italy and company – which was created by the cheap and easy credit of the noughties – it is the first time where the Euro has been tested to its limits. Its limits have proven to be woefully weak.

But progress is being made, on the political stage. On Monday, at a Christian Democrat Union (CDU) Conference, Merkel was reported to have pressed for an economic and political union in the Eurozone. @EPPTweet tweeted earlier: RT @SMuresan#Merkel at #CDUpt11: “We have to complete monetary and economic union and pave the way for political union in #Europe” #epp

This is a step in the right direction, but there also remains a stumbling block – the German constitution. We shall see what happens, but progress is being made and the faults of the Euro are, apparently, in the process of being corrected.