European Union

Euro zone greets new member of Baltic fan club

5 Jun 2013

EU authorities say Latvia can join the euro next year. That is a welcome, if unsuprising development. The Baltic country has undergone a serious adjustment and stands to gain from joining the bloc. Three years after Estonia joined, the euro zone could do with a confidence boost.

Europe yields to reality on austerity

29 May 2013

The European Commission will give France, Spain and others time to hit hair-shirt deficit targets. A retreat was almost inevitable. Harsh austerity is senseless when investors are docile and voters are restless. The snag is that gentle markets will also ease pressure for reform.

Europe rightly throws shade on solar tariffs plan

28 May 2013

Why would Germany and other EU countries reject punitive tariffs on Chinese solar panel makers? After all, they are the ones who suffer. But European companies in other industries producing in China have more to lose. Fairness may not prevail, but rationality should.

How capital controls are prolonging Cypriots’ pain

27 May 2013

After March’s brutal haircut on bank deposits, the island state’s economy will shrink this year whatever happens. But punitive controls on Cypriots’ access to their own money are making things worse. Efforts to stop the rot clash with the need to avoid financial instability.

Hugo Dixon: Why Draghi likes London

27 May 2013

The ECB President said last week that Europe needs a more European UK as much as the UK needs a more British Europe. Draghi is a man of the markets and, as such, is sympathetic to the British way of doing things. No wonder he’d prefer Britain to get stuck in than opt out.

Solar subsidies don’t merit costly trade war

22 May 2013

Solar panel prices are depressed, but irate Western manufacturers probably exaggerate the role of Chinese government support. While punitive EU tariffs and tit-for-tat Chinese retaliation might help profit, they would almost certainly make solar energy less competitive.

Securitisation may have found a way to rehab

21 May 2013

Can one crisis solve another? Securitisation could help small companies. That slicing and dicing of credit risk also caused the last credit boom. Getting it moving fast would require support from the ECB and governments, and the belief that past mistakes won’t be repeated.

Hugo Dixon: UK should get on front foot with City

20 May 2013

Britain has been playing a defensive game in response to the barrage of misguided financial rules from Brussels. It now needs to sell the City as part of the solution to Europe’s problems. The opportunity is huge. It could even help keep Britain in the EU.

Widened EU bonus cap looks more like a net

17 May 2013

A new proposal not only limits bonuses for banks’ biggest risk takers, but for anyone paid more than 500,000 euros. The good intentions and the prospect of a more level European playing field are appealing, but reduced cost flexibility would make banks more dangerous to society.

Oil probe shows the slippery nature of prices

16 May 2013

Even if the EU probe into the manipulation of published energy prices comes to nothing, it highlights a strange market. In the global energy trade, billions of dollars change hands on the basis of “best guess” benchmarks. More is at stake than fines for rogue traders.

Oil price collusion would be a Libor-scale scandal

14 May 2013

EU authorities are probing whether traders in oil majors conspired to rig published energy prices. Oil benchmarks are supposedly harder to manipulate than bank rates, so this could be a big deal. Even if no collusion is found, it makes a review of arcane price-setting mechanisms more urgent.

Investors need to be alive to UK’s EU-exit risk

13 May 2013

Policy splits in a weak London government raise the chance that Britain will leave the EU. It’s still only a tail risk, but investors should be wary. Hard-to-model ructions could start any time. Fortunately, adverse market reactions could bring UK politicians to their senses.

Hugo Dixon: Brexit would be bad for Britain

13 May 2013

Membership of even an unreformed EU is better than quitting. Exit would mean either not having access to the single market at a huge cost to the economy, or second-tier access without a vote on its rules. What’s more, if the UK stays in, it has a chance to reform the union.

UK’s sovereign debt precaution at odds with EU

10 May 2013

Britain’s financial watchdog wants lenders to expect big losses if government bonds default. That helps fix a flaw in how capital ratios are calculated. But EU rules mean European debt is excluded. The UK’s decision to push ahead on principle could have perverse consequences.

EU needs a swift and lasting unemployment cure

9 May 2013

High joblessness rates are unacceptable but not irreversible. Governments should get serious. Tackle political obstacles, reform job markets, improve education and incentivise hiring. The EU can help by offering investment, structural funds and job guarantees for the young.

UK minus EU is another loser from Lawson

8 May 2013

Nigel Lawson has done it again. The chancellor responsible for a housing bubble that left the economy struggling for half a decade now recommends an EU exit. But leaving the EU doesn’t do anything at all to help the UK in Asia. It will simply repel multinationals and isolate the UK.

Europe should cheer, not jeer, cheap Chinese solar

7 May 2013

Even if China is subsidising its domestic solar producers, the EU plan to slap big tariffs on imported panels is counter-productive. Cheap components are fuelling a solar boom. Europe may have missed the chance to become a manufacturing hub, but it should still reap big benefits.

Europe’s austerity remorse brings long-term lesson

25 Apr 2013

European Commission leaders admit that they pushed austerity too hard. The policy’s blunt application has caused great harm. It’s not too late for pragmatism. The Commission must be less of a short-term disciplinarian and more of a long-term hawk.

Barnier broadside leaves EU looking soft on banks

23 Apr 2013

The EU’s top financial regulator seems out of touch on banking reform. While his peers want lenders to keep more capital, Michel Barnier says the U.S. should give European banks a break. He thinks global teamwork can avert problems. History suggests that’s naïve.

German caution will make banking union stronger

15 Apr 2013

Germany’s finance minister says that a pan-European bank resolution scheme requires changing the EU treaty. This is less an attempt to delay the banking union than a statement of fact. It does not impact the common bank supervisor, nor direct recapitalisation through the ESM.