The eurozone will remain mired in recession in 2013 and leading nations such as France and Spain will miss debt-cutting targets, the European commission has admitted, backtracking on forecasts that the 17- country bloc will grow this year.

The European Union's executive body blamed a lack of bank lending to households and businesses, and record joblessness, for delaying the recovery. Unemployment in the eurozone is set to peak at 12% in 2013, or more than 19 million people, it said. Greece and Spain will be the worst-hit countries, with jobless rates of 27% this year.

The estimate highlights the widening chasm between Germany and France, the two largest eurozone economies, amid warnings this week that France is drifting closer to the bloc's periphery than its main economic rival. The commission predicts that Germany will grow by 0.5% this year, while France is expected to eke out just 0.1% growth. Joblessness among the French is expected to hit 10.7%, compared with 5.7% in Germany.

A senior ally of German chancellor Angela Merkel accused France of being a "problem child" in the eurozone. Michael Fuchs told German radio the French needed to save, implement economic reforms and work longer hours. "Other countries have done their homework a lot more intensively, for example Spain and Italy … but the French believed they could escape this," he said.

Marco Buti, the commission's director general for economic and financial affairs, said unemployment remained unacceptably high. This had grave social consequences, he said, and could weigh on growth in the future if it becomes entrenched. The figures also have consequences for the UK because the eurozone is the economy's largest trading partner and is the fulcrum of hopes for an export-led recovery in Britain's finances.

The commission said the threat of a breakup of the eurozone had receded and financial market conditions had improved substantially, but the impact had not yet fed through into the real economy. As a result, it said the 17 eurozone economies would contract by 0.3% in 2013 rather than grow by 0.1%, as previously predicted.

UK - Dismissing criticism of the UK referendum in a speech in Davos, the Prime Minister insisted that the EU had to “be frank" about its performance.

He said the bloc was being “left behind” global competitors, “leaving behind its people” and the European economy was a “big, looming problem”

In a passionate and energetic address to the World Economic Forum, he said Britain would use its G8 leadership to drive changes on “tax, trade and transparency”. Anticipating criticism for “business-bashing”, he insisted he was “as pro-business leader as you can find".

"I yield to no-one in my enthusiasm for capitalism,” he said, “This is a vision of proper companies, proper taxes and proper rules….for the good of people across the world.” It's a big moment, and having read the speech my first impression is that it exceeds expectations: once again, he has shown a knack for delivering under pressure. The focus is on the detail of his timetable for a referendum, but the argument he sets out in depth is worth studying. He analyses the EU's problems - the euro, weakening competitiveness, the democracy gap - and argues that the EU must reinvent itself based on five principles: competitiveness, flexibility, giving power back to member states, democratic accountability and fairness.

Crucially, he says his preference is for a new treaty that would mean a collective change. If not, Britain will seek its own renegotiation. Britain is independent and open, he argues, and should be listened to. "I believe in confronting this issue, shaping it, leading the debate not simply hoping it will go away." He says that now of course but it wasn't always thus. Still, he has grasped the issue and now aligns himself squarely with the In campaign.

Note that a major chunk of his speech sets out the argument for staying in the EU, and the perils of leaving: he does not linger on the fence. This speech will mark a significant break in the pattern of politics: Mr Cameron will offer the electorate a chance to leave the EU, a groundbreaking moment. He hopes this will be a major vote winner, and will trump Labour. It will also have substantial consequences for the Conservative party because it will force it to confront and resolve once and for all the division that runs through its heart. Polls suggest the EU is not the hot issue many say it is. But in the light of this morning I suspect those predicting Mr Cameron's defeat in 2015 may at the very least need to reconsider.

 

As a EU Citizen let me say one thing about Mr Cameron so called "Europe Speech": he has delivered a very Italian style speech, full of void promises.
1) Promise: "..if we win the elections.." which is after 2015 in any case when he is likely, very likely, to lose
2) Promise: ..after negotiations for a new status for Britain within the EU... which will take (I'm positive) at least another 2/3 year time after 2015
3) Promise (more a void hope and a linked void threat):... if the other EU partners says no to the request of the British, then Britain will leave...
Mr Cameron (and with him the so called eurosceptics) knows perfectly well that the other European leaders will not allow him another "cherry picking" tour that will jeopardize the entire structure of the EU.
Consequently they will very likely say simply "NO" to the requests of Mr Cameron.
This will add another year or couple of years to the negotiation time (and we end up towards 2018/2019... well after another referendum that is to take place in the UK: the Scottish Independence one (Will the UK remain a United Kingdom or just a "United Crowns!", at the best).
Then it will be to Mr Cameron (/is still in power by then) to say "We (Britain) leave the EU"
And this will kill yhe only real industry active in Britain: the City.
It will be such an easy game for the other Europeans to impose curbs/taxes/fees/obstacles to their residents to transact from a Country which is out of the EU.
Or, is there anyone in Britain that believe (in this case he/she is simply stupid) or hope (in this case she/he is shortminded) that Britan can leave the EU and keep the advantages of being part of it?
This is likely to match the "Italian promises" of Mr Cameron with the "Italian expectations" of the "out of the EU to save Britain" propaganda.
BUONAFORTUNA (Good Luck) for the...DAY AFTER!

Herman Van Rompuy is obviously scared of a referendum in Britain as this is what Cameron will do.  EU is well known for repeating a referendum until they get the answer they want which will not happen here.  Rompuy is actually saying : Britain's moves could make EU fall apart.  To which I will say about time as they are again stocking up future problems as the democratic legitimacy of the various parliaments in budget plans. But it's not just David Cameron, is it? During the recent by elections Ed Milliband spent a considerable ammount of time trying to steal UKIP's clothes and even went as far as "joining in the debate on immigration". I think you'll find that both Cameron and Milliband will find a narrative on Europe that will be popular with the electorate and only the Lib Dems will have a pro European message; alas nobody give's a toss about what they have to say these days. The truth is much harsher than any politician will tell you..... whether we stay or leave we're in a serious long term decline and there's very little we can do about it. Traditionally in times such as these it's the extreme political parties that come to power.... I just hope that history won't repeat itself this time, but............. in some parts of the EU it already is.  Agreed that we need a proper debate about Europe to help us make a decision based on facts, not on xenophobic tabloid articles and stereotypes, or on the other hand, fear of upsetting other member countries. I am more pro-EU than I am anti-EU, but I certainly don't appreciate being lectured and threatened by people like Mr Van Rompuy, a man with no democratic mandate who is part of a project to force a USE on the people of Europe. If he and others like him were actually accountable to the people they purport to represent, they would have had to spend their time trying to accommodate the different levels of enthusiasm for ever greater integration, and explain the benefits of integration to the people of Europe instead of simply grabbing their sovereignty through hidden treaty signings and farcical multiple referendums.

Instead we have a situation where a majority of UK voters strongly resent the EU without knowing very much about it at all. ,,,

It's rather silly to say that if we left the EU we couldn't trade with them, or couldn't do so on good terms.

 Mexico is not part of the EU, does not contribute to it, does not have to apply and enforce EU law, and yet has a bilateral free trade agreement with the EU (and is at the same time part of NAFTA, the North American Free Trade Agreement). China does not apply EU law and is actiely hostile to some of it (airline emissions, for example) yet has no difficulty trading with the EU. Not being a member doesn't mean you have to apply the rules but have no say - as an independent state, you can choose to apply or not apply whatever rules you see fit. Given the the UK is more important in trade terms to the EU than the EU is to the UK, it is unlikely that Brussels would have much clout in this respect were Britain to leave. In fact, it is being in the EU that restricts our trading ability. Britain, under EU law, is like any other member state forbidden from entering into trade agreements with anyone on its own - it can only do so through the EU. Leave the EU, and we can make as many agreements as we want with anyone who wants to sign up.

That said, the usual spineless collection of people afraid of being "out of step" that comprise our political class will doubtless find a way of ensuring Britain gets the worst of all worlds.

Germany's main opposition, the Social Democrats, have upped the ante, saying that Chancellor Angela Merkel must assume greater risks to avert a breakup of the single currency.

Bloomberg has a report on an interview the SPD floor leader, Frank-Walter Steinmeier, gave to the Rheinische Post newspaper.

He raised the pressure on Mrs Merkel to agree to more burden-sharing to stem the euro crisis, claiming that Mrs Merkel, while rejecting euro-region bond sales, fails to say that Germany is already exposed to losses from the debt crisis through the European Central Bank’s bond purchases:

The government should finally be honest about it to the people. If we want to prevent the breakup of the euro zone, it won’t be without risks for Germany.....I have been following the EU. crisis for the last three years and the Muppets in Brussels still have no idea what to do. It gives me no confidence at all in our leaders in Brussels. The numpties in Westminster are not too bright but they beat the nutters in Brussels and Strasbourg hands down.

From debt crisis to food crisis. The UN's food agency has warned today that the world could face a food crisis like that of 2007/08 if countries restruct exports on concerns about a drought-fuelled grain price rally. In its latest update, the Food and Agriculture Organisation said its food price index climbed 6pc last month, after three months of decline, driven by a surge in grain and sugar prices.

Anxieties over extreme hot and dry weather in the US Midwest sent corn and soybean prices to record highs last month, driving overall food prices higher.  Grain markets have also been boosted recently by speculation that Black Sea grain producers, particularly Russia, might impose export restrictions after a drought there hit crops.

The FAO's senior economist and grain analyst Abdolreza Abbassian told Reuters:  There is an expectation that this time around we will not pursue bad policies and intervene in the market by restrictions, and if that doesn't happen we will not see such a serious situation as 2007/08. But if those policies get repeated, anything is possible.

On the question of the single currency and its survival, the majority -- 54 percent -- believes that Germany should not continue to fight to save the euro if it has to provide additional billions in aid. A sizeable minority (41 percent) disagrees, however, while 5 percent are undecided.

The survey revealed that this skepticism is shared by Germans of almost all political affiliations. Among respondents who support Angela Merkel's conservative Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), 52 percent said it was almost pointless for Germany to continue fighting for the single currency, while 45 percent disagreed. The figures are similar among supporters of the opposition center-left Social Democratic party (54 percent versus 43 percent), which has generally supported Merkel in her efforts to fight the crisis.

The greatest skepticism was found among supporters of the far-left Left Party, 68 percent of whom felt it was pointless to keep fighting to save the euro. The most pro-European tendencies were found in the camp of the environmentalist Green Party. There, 64 percent thought Germany should keep trying to rescue the monetary union.

The divide in the responses mirrors a current debate among top economists in Germany. This week, influential German economist Hans-Werner Sinn published an open letter, signed by around 170 economists, criticizing the resolutions agreed upon at the most recent European Union summit and claiming that Merkel was "forced into" agreement at the meeting. Other leading economists, including Peter Bofinger, a member of the German Council of Economic Experts that advises the German government, have reacted by attacking the letter and defending Merkel's policies.

The survey was conducted by the pollster TNS on July 3-4. Around 1,000 Germans aged 18 and over took part.

Well done Greeks - you have voted for your continued slavery...to the 4th. Rich

BRUSSELS--- Europe, facing a momentous Greek election after a week of mounting financial stresses, is preparing for what some financial analysts are calling its "Lehman moment": the prospect that Greece could leave the euro currency union following Sunday's vote.

Mean Street host Francesco Guerrera calls on WSJ's Charles Forelle to discuss why the European crisis is so important to the U.S. economy.

With Greece poised to vote on austerity measures, the Euro zone is on the verge of a painful rupture that could be its dissolution. If Greece chooses to exit the Euro, the resulting chain of events may be hard to contain.  Yet, European officials say that even an election that results in a Greek embrace of the euro and an acceptance of the terms of Europe's March bailout of the country may only temporarily ease pressure on the euro zone, whose crisis-management strategy many analysts say lies in shreds.

Borrowing costs in Spain and Italy rose sharply higher in recent days despite efforts to insulate Spain, the euro zone's fourth-largest economy, from the effects of Greek uncertainty by lining up a bailout request last weekend for as much as €100 billion to boost the capital of Spanish banks.

"We are back in the danger zone," said Jean Pisani-Ferry, director of Bruegel, a Brussels-based economic think tank.....After his side beat Russia to advance in Euro 2012, Greek national football manager Fernando Santos was asked how much modern European civilisation has strayed away from its ancient Greek roots.
He replied: "We are inspired by Greek history, not Merkel." I say : ...BUT, WHATEVER Horst Rechenbach The Governor of GREECE decides is the LAW ...!!!! Greeks have done it to themselvs !!!! 
PARIS -- The quiet elections - -French voters have been taking part in a second round of parliamentary elections seen as crucial for President Francois Hollande's reform agenda. The socialist leader, who was elected last month, is seeking a solid left-wing majority in the lower house.   He has promised to hire more public workers and to refocus EU fiscal efforts from austerity to "growth"......Socialists and their left-wing allies won 46% in last Sunday's first round, against 34% for the centre-right UMP.  Nationwide, the turnout was a modest 57%. France's 46 million eligible voters are picking representatives for 577 seats in the National Assembly.  After the first round, 36 seats out of 577 were declared in constituencies where the winner got more than 50% of the vote. Socialists and their allies won 25 of those seats.

" The EU summit fails to provide answers"

The EU continue to whistle in the dark and kick the "Big Can" down the Alley?!?..."the Mad Foools"... they've created A Financial-Socio-Economic...D O O M S D A Y Device!!!Markets had expected the latest EU summit to disappoint and it did" - they expected the exact opposite on Tuesday as the FTSE jumped 50 points supposedly on Europe hopes. The markets are not really interested in the politics. In a no win solution, its a catastrophe if Greece stays in the Euro and a catastrophe if they leave. Given this then it is obvious that the only thing that markets are interested in is QE and liquidity injections. Today market 'reality' is that they go up on bad news as that increases the likelihood of more QE/LTRO etc and they go down when there is any kind of positive news as that lessens the probability of QE. Central Bank interference in markets has completely reversed how they should function. Worse still, the TBTF banks are bigger than ever and taking bigger and bigger leveraged spread bets because central banks have taken risk off the table. Sheer insanity. The EU and the EZ are a failure, a very expensive failure.
Surely our elected politicians must come to reality, start thinking for themselves instead of listening to the likes of Christine Lagarde, who while lecturing us, her only thought is the French banks, if Greece leaves the EZ the French banks will be hammered. Hollande is a sly socialist fox, not to be listened to, and his ideas must never be entertained, and to listen to the unelected Van Rom Puy and Barrosso is sickening and an insult to all free peoples. The whole stinking, corrupt edifice that is the EU has to be dismantled. The tools to do the job are simple and free. Truth and Democracy. Truth and Democracy are the biggest enemies of the EU. now is the time to use them. There are too many peoples' (very lucrative) careers tied up to this project and these very same people and going to make sure that their income stream continues as long as possible. The only economic growth they care about is the size of their own wallets. I'm not sure how this nightmare will end but rest assured that turkeys do not vote for Christmas. I think they will need to be "physically" removed. Ridiculus van Rompuy, Fatboy Barroso, Hideosa Ashton and all their attendant spokespersons, advisors and offices make rather less impact than a fart in a thunderstorm.