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Greek stocks slump following government’s decision to bring forward Presidential election

10 Dec 2014

Markets reacted badly to the Greek government’s decision to call snap Presidential elections with the Athens stock market falling by 12.8%, the largest one day fall since 1987. Greek borrowing costs also spiked. Yesterday, the governing new Democracy party announced former European Commissioner and Greek Foreign Minister Stavros Dimas as their presidential candidate.

Writing on his Forbes blog, Open Europe’s Raoul Ruparel argues that moving up the election “is a risky play, but I think it was probably the correct decision (at least from a political perspective)”. This is because the exit from the bailout has not been secured nor a precautionary credit line, meaning the advantage is with the governing New Democracy – proven entity – and may increase its chances of success in any early election.
Forbes: Ruparel
Open Europe blog Kathimerini Kathimerini 2 FT FT 2 City AM WSJ WSJ 2 Euractiv Euractiv 2 Times Bloomberg

IMF warns $15bn funding gap in Ukraine needs to be filled within weeks to avoid financial collapse
The IMF has identified a $15bn funding gap in Ukraine, on top of its current bailout, which needs to be filled in the next few weeks to avoid a financial collapse. The gap has opened largely due to a 7% contraction in Ukrainian GDP. Meanwhile, EU Economics Commissioner Pierre Moscovici confirmed that the EU is “examining…the possibility of a third program of macro-financial assistance [for Ukraine],” but that it depends on the EU’s “capacity to find resources”. Separately, Russian Foreign Minister Sergei Lavrov expressed his “concern” over recent comments by German politicians which have been very critical of Russia. EUobserver reports that, according to unnamed Lithuanian sources, a new round of trade talks between the EU and the Russian-led Eurasian Union are being prepared.
WSJ EUObserver EUObserver 2

A new Survation poll on EU membership has found that some 46.6% of UK voters would vote “out” while 34.3% would vote “in”, with 19.1% undecided, the Express reports.

Raoul Ruparel: “Despite admirable goals the EU’s green policies have imposed huge costs”
Open Europe hosted a roundtable discussion in Brussels on EU energy and climate policies, where Open Europe’s Raoul Ruparel presented Open Europe’s new report on the issue, saying: “despite admirable goals the EU’s green policies have imposed huge costs but delivered limited benefit and are marred by conflicting objectives.” European Commission official Øyvind Vessia challenged the report, arguing that when external costs are considered, renewable energy sources would be cheaper than coal and gas. Other participants included Brian Ricketts, the Secretary General of the EU’s coal industry federation EURACOAL. Ricketts said he agreed with the report while also stressing that carbon leakage is an important area for investigation which the Commission should conduct more research into.

Separately, the Times reports that the cost per household of subsidising wind and solar farms and other sources of low-carbon electricity will double in five years and treble by 2030, according to the Government’s committee on climate change.
Open Europe: Events Open Europe Research Open Europe: Video Open Europe: Audio Times

FAZ reports that, according to leaked macroeconomic models from the ECB, a €1 trillion sovereign bond purchase programme would only increase Eurozone inflation by between 0.15% and 0.6%.

Disney and Koch Industries have become the latest companies to be dragged into the growing row over secret tax deals in Luxembourg after new leaked documents were released today. Meanwhile, Simon Harris, a junior Irish finance minister, said that his country has “nothing to fear” from EU proposals to tackle multinational tax avoidance since “the actual setting of tax is a matter for the member state.”
FT WSJ Irish times Euractiv Irish Times 2

Data released yesterday showed that German labour costs rose by 2.3% in the third quarter of the year compared to the same period last year – the sharpest rise since early 2013 and much quicker than many other Eurozone states.

In an appearance before the Portuguese parliamentary commission looking into the collapse of Banco Espirito Santo the former CEO of the failed lender Ricardo Espírito Santo Salgado said that the bank “did not fail. It was forced to disappear,” since the government rejected earlier requests from the bank for a €2.5bn loan.

EU member states and the European Parliament have reached a deal on the 2015 EU budget and amendments to the 2014 budget, which will be topped up by €3.5bn.
Independent EP press release

During a visit to Ankara yesterday, British Prime Minister David Cameron said that he still “very much supports” Turkey joining the European Union, reports the Telegraph.
FT Mail

Local.se reports that a YouGov poll has found that if there had been an election last week, almost 18% of Swedish voters would have selected the anti-immigrant Sweden Democrats, compared with 13% who chose to vote for them at the last general election.

The Independent reports that Andrew Lansley, the former Health Secretary, told the Conservative Europe Group, which has the support of 60 Tory MPs, that “We must not fall into the Ukip trap of defining the decision as being whether or not we have to vote ‘out’ in order to prevent the ever-closer union beloved of the federalists.”

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