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EU agrees preliminary deal on EU budget which will see spending rise to €141.2bn; Topping up this year’s annual budget could cost the UK around £420m

09 Dec 2014

Negotiators from the European Parliament and member states struck a preliminary agreement on the 2015 annual budget yesterday which will see total spending of €141.2bn – a 4.2% increase on the 2014 budget as originally agreed – as well as a €4.8bn retroactive top-up for this year. Open Europe’s estimate that the top up could cost the UK around £420m is cited by the Times and the Sun. Open Europe’s Pawel Swidlicki is quoted in the Sun as saying that the latest inflation busting increase “shows why it is so important for David Cameron to push through radical changes to the way the EU spends taxpayers’ cash. Cutting back outdated farm subsidies and returning control over regional development funds for wealthy countries like the UK would save billions”.
European Parliament press release Times Sun European Voice Reuters

Greek government brings forward Presidential election following two month bailout extension
Eurozone finance ministers yesterday agreed to grant Greece a two month technical extension to its bailout to allow the final review to be completed by the end of February. Following the decision, the Greek government announced that it would bring forward the first round of the Presidential election – a vote taken by MPs - from February to 17 December. The new President must gain at least 180 votes in parliament otherwise the country will require snap general elections. Separately, data released yesterday showed that Greek exports grew by 7% year on year in October, mostly thanks to the weaker euro.
Kathimerini Kathimerini 2 FT City AM WSJ Kathimerini 3 European Voice BBC Süddeutsche

Merkel’s home affairs spokesman says UK will attract migrants while economy booms
The Times reports that Stephan Mayer, parliamentary spokesman on home affairs for Angela Merkel’s German coalition will today make a speech in London on EU migration and will say that, “As long as the British economy continues to grow faster than in the rest of the EU and the British labour market continues to rely on migrants from outside the UK, it is hard to predict a decline in the numbers.”

Meanwhile, the front page of the Mail reports that builders are hiring Portuguese bricklayers on £1,000 a week because not enough Britons can do the job. Skilled workers are in such short supply they can demand double the normal day rate of £100. James Hick of recruiters Manpower is quoted as saying, “There is a severe shortage of skilled tradespeople in Britain – bricklayers, plumbers, electricians, mechanical engineers, HGV drivers.”
Times Mail Times 2

French Finance Minister warns Germany on negative comments which could boost extreme parties
In an interview with the FT, French Finance Minister Michel Sapin said he is “concerned by certain extreme comments in Germany”, adding, “people have to be careful from the outside on how they express views on France”. He warned that, if respect is not paid, then “it will help extreme parties to grow”. Sapin said that France is “fully aware” that it needs to do further fiscal cuts and reforms but added that some other countries fiscal policy could “could compensate a little bit”.
FT Times

The Times reports that, barring an unlikely compromise, EU finance ministers will accept today that no agreement can be reached on plans for financial transaction tax (FTT) this month. The proposal, being worked up by 11 EU states is to be delayed, after they failed to agree on its basic elements before the deadline for its launch in 2016.
Times Irish Independent

The FT reports that the so-called Visegrád Four – Poland, Hungary, the Czech Republic and Slovakia – are joining forces to try to secure a disproportionately large share of the EU’s proposed new €315bn investment fund in order to integrate their national energy networks. Open Europe Berlin’s Deputy Director Nora Hesse is cited by Deutsche Wirtschaftsnachrichten discussing the potential effectiveness of the investment fund.
FT Deutsche Wirtschaftsnachrichten

The Telegraph reports that according to analysis by the British Election Study, a group of UK academics, based on a survey of 30,000 voters, 43.6% of those who said they would vote for UKIP were originally Conservative voters, compared with 12.9% who voted Labour and 18% who voted Lib Dem. The study concludes that two million voters who voted Conservative in 2010 may now vote for UKIP.

The ECB will hold its second offer of its Targeted Long Term Refinancing Operations (TLTRO) on Thursday with most analysts expecting demand to disappoint. A study by Bloomberg found that on average banks are expected to take up €170bn out of a possibility of €317bn in loans from the ECB.

Novo Bank, the ‘good bank’ created following the collapse of Banco Espirito Santo, has announced that Chinese firm Haitong Securities has agreed to purchase the investment bank of the collapsed lender for €379m.

The Ukrainian government announced a ‘day of silence’ in Eastern Ukraine and promised to fully observe a truce, though it said it would respond if attacked by pro-Russian separatists. Separately, Russian Foreign Minister Sergei Lavrov said that both sides remain “far from” the goal of reduced tensions in Ukraine.

The FT reports that France and Germany have rejected moves by the European Parliament to impose even tougher emissions reductions targets on vehicles sold in the EU from 2025 on top of the EU’s existing targets agreed last year which set a maximum limit of 95g of carbon dioxide emissions per kilometre.

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