BRUSSELS - European Commission president Jean-Claude Juncker is to unveil his highly-anticipated €300bn investment plan next week (24-30 November) with most of the focus set to be on how much is 'new' money and how much is just recycled from existing funds.

The plan, announced by Juncker before he was elected into office, has taken on a significant symbolic importance as it is meant to be a way of kickstarting the struggling EU economy.

But although the idea was welcomed from the offset, it was immediately dogged with questions about where the money would come from, and how much would be from the public and private sectors.

The commission has already indicated that it will include a recently-announced German public investment programme, of €10bn, in its calculations but has also said several times that the new funds should not create new debt in member states.

Meanwhile, the EU's 'growth pact', announced in 2012, casts a long shadow. It largely failed in its bid to generate growth and relied heavily on leveraging €10bn of new money for the European Investment Bank to give the pact its headline €120bn of funds.

The investment fund is set to be decided Tuesday (25 November) and formally unveiled before parliament on Wednesday. This gives time for the entire commission to attend a motion of censure against Juncker, filed by eurosceptics in the European Parliament, on Monday evening.

It is unclear whether the OMT case will in fact clear the air. Euroceptic groups and professors in Germany are already planning to file a fresh case against QE at the German Constitutional Court if the purchases escalate, arguing that the scale entails large liabilities for the German taxpayer and circumvents the budgetary sovereignty of the Bundestag.

They argue that QE is fiscal policy by stealth, conducted outside democratic control. Some experts say such a case would give the Bundesbank the legal excuse it wants to step aside from any ECB bond purchases, effectively rendering the ECB action null and void.

Mr Six said QE is a necessary condition for recovery in Europe, but is not sufficient in itself. “The question is where does this bridge take us,” he said. "The eurozone can survive a couple more years of miserable growth but it can’t go on forever like this before people lose hope. There is political risk almost everywhere."   On Britain, the agency said the “output gap” used to measure how far the economy is falling short of its potential is still 4.5pc of GDP. This is much higher than the 1pc estimate used by the Bank of England to justify talk of early rate rises. 

Mr Six said the UK capital stock has been less damaged than widely assumed by the economic crisis, while abundant immigration has created a pool of cheap labour that is holding down wages.

Economists are deeply split over the size of the output gap: a soft indicator that is very hard to measure, but has nevertheless acquired totemic status. The International Monetary Fund and the OECD club of rich states both have estimates close to 1pc, while the Office for Budget Responsibility is at 1.4pc.   Yet a number of private analysts agree with Standard & Poor’s. Andrew Goodwin from Oxford Economics said the gap is 4.4pc based on weak productivity trends and historic evidence that financial crises do not destroy much existing plant. 

“There is still a lot of spare capacity in the UK economy. The fact that wage growth has stayed so low for so long is evidence of this. We don’t think there should be any rate rises until the end of the next year at the earliest, and we don’t think there will be any either,” he said.

Standard & Poor’s praised the Bank of England for doing a“very smart job” in its response to the financial crisis by allowing inflation to overshoot its target at crucial phases, effectively eroding the debt burden by boosting nominal GDP. “This has improved Britain’s debt ratios,” Mr Six said.

The contrast with much of the eurozone is striking. The ratio of public debt to GDP has been rising fast in the most heavily indebted EMU economies, overwhelming any gains from austerity cuts.

Euroscepticism is taking hold even in the country at the heart of the European project. And one of the continent's chief Eurosceptics, British politician Nigel Farage, has become an idol to some young Germans - to the consternation of many others.  For rebels, they appear extremely polite, are impeccably dressed and display a distinct lack of piercings or tattoos.  Germany's Junge Alternative (JA), or Young Alternative, may be dissidents - a Eurosceptic youth movement determined to overturn Germany's long-standing pro-European orthodoxy - but they are very conservative ones, advocating a crackdown on immigration and crime.   One of the main reasons for people joining the JA is that we try to speak and think without political correctness”   End Quote Sven Tritschler JA chairman, North Rhine-Westphalia  ,  In fact their stance has earned them a particularly bad rap from the national press. In the short year since the group's launch last June, the JA have repeatedly been accused of being "too far right", politically regressive and anti-feminist.  The organisation is linked to the country's first Eurosceptic party in decades, the Alternative fuer Deutschland (AfD), or Alternative for Germany, which wants the euro broken up.  But it remains an independent movement and even the groundbreaking AfD regards it as something of an unruly offspring.  "The media sometimes portray the AfD as far-right and, because we are more direct and more right-leaning than the AfD, we're seen as extreme-right - but that's not the image I have of us," says Sven Tritschler, the JA chairman for North Rhine-Westphalia, Germany's most populous state.  The state's biggest city, Cologne, was the starting point for the AfD's European election campaign on 27 April. A fifth of all party members are based in surrounding North Rhine-Westphalia, and the AfD is hoping to further increase its support here.

According to many analysts, the future of the eurozone was secured after a now famous speech by ECB chief Mario Draghi, in July 2012, in which he promised to do “whatever it takes” to save the euro.  But according to leaked transcripts - obtained by the FT - of interviews for a book by former US treasury secretary Timothy Geithner, the ECB chief’s comments were anything but planned.

According to Geithner, the remarks were “off-the-cuff” and “totally impromptu”. “I went to see Draghi and (...) at that point, he had no plan. He had made this sort of naked statement of this stuff. But they stumbled into it”, a leaked transcript of the interview says.  Improvisation as the origin to one of the most important comments on the eurozone fits with other descriptions of the ECB president.  Simeon Djankov, Bulgarian finance minister from 2009 to 2013, describes the different personalities of Draghi and his predecessor, Jean-Claude Trichet.

In his book “Inside the Euro Crisis”, he writes about the different personalities of successive ECB presidents Jean-Claude Trichet and Draghi.  During meetings with the EU finance ministers, Trichet “would read prepared statements, and after that he would fade into the role of passive observer,” Djankov wrote in his book “Inside the euro crisis”.  Draghi, on the other hand, had a “more instinctive approach” and “scribbled his talking points on bits of paper a few minutes before the meeting began, tossed out comments throughout the discussions, and stayed until the end”...

Eurozone inflation rose to 0.4pc in the year to October, up from 0.3pc in the preceding month. At that level, price growth remained stuck well below the ECB's medium-term target of close to 2pc.

“It is essential to bring back inflation to target and without delay”, Mario Draghi, president of the ECB, said in a speech in Frankfurt on Friday.

The central bank official made reference to the quantitative easing schemes launched by the Federal Reserve and the Bank of Japan, noting that they had reduced the strength of the country's respective currencies.  Traders sold the euro on Mr Draghi's dovish comments, as the currency fell by more than three-quarters of a percentage point to less than 1.25 against the dollar. Mr Draghi stressed that while there had been improvements in the financial sphere, these had “not transferred fully into the economic sphere”, where the situation “remains difficult”.   The currency bloc has an eye-wateringly high unemployment rate of 11.5pc, while economic growth has ground to a near-halt .   The eurozone managed to dodge a third technical recession since the financial crisis, but it now appears that the euro area economy is unlikely to pick up speed by the end of the year.  The ECB has made a number of interest rate cuts across the year in an attempt to boost the economy, consequently bringing one of its three main rates - the deposit facility rate - into negative territory.   The rate is currently maintained at -0.2pc, meaning that banks that park their money with the ECB overnight have to pay the central bank for the privilege.

 

MOSCOW, November 11 (Sputnik) – Military veterans and about 80 families of US soldiers killed in Iraq are suing five European banks, accusing them of transferring money to Iran that was later used to finance attacks against American troops, the Guardian reports.

The lawsuit is based on the allegation that "Iran funded, trained and armed a number of 'special groups' among the Shia militia that perpetrated attacks on US forces [in Iraq]," Gary Osen, the New Jersey-based lawyer for the plaintiffs said Monday, as quoted by the Guardian.

Osen told the Guardian that the lawsuit, lodged with the US district court in Brooklyn, New York, on Monday, was designed to tell a "largely untold story" of Iran's involvement through proxies in Iraq "to kill large numbers of coalition forces".  The five defendant banks are Barclays plc, Credit Suisse Group AG, HSBC Holdings plc, Standard Chartered and Royal Bank of Scotland Group plc. According to Osen, the banks were earlier subject to US Department of Justice investigation after they were alleged to have bypassed sanctions rules by siphoning money to Iran, as well as Cuba and Libya.  None of the banks have yet commented on Monday's lawsuit, according to the Guardian.

The five defendant banks are Barclays plc, Credit Suisse Group AG, HSBC Holdings plc, Standard Chartered and Royal Bank of Scotland Group plc.

Jean-Claude Juncker served for 19 years as prime minister of Luxembourg, and his country's tax system was very much one of those "national interests" that he so often complained about. Still, his reputation as "Mr. Euro" did not suffer as a result. The revelations, to be sure, are nothing new. Indeed, as a German minister said on the sidelines of one of last week's many events scheduled to commemorate the 25th anniversary of the fall of the Berlin Wall: "Everybody knew about it." The minister added that the Luxembourgian tax schemes were consistent with the legal framework, even if they managed to "artistically expand" that framework. "What is the big news?" That, though, is perhaps the wrong question. The correct one is: Should a politician representing his country's national interests be held to different standards than the European Commission president charged with upholding EU treaties? The answer is clearly "yes". And therein lies the political problem that is currently facing Jean-Claude Juncker. As the head of his country's government, Juncker -- who concurrently served as finance minister for several years -- helped develop Luxembourg into a tax paradise and blocked outside attempts to investigate its tax system. In 2004, after the Social Democrats joined Juncker as a coalition partner, the government agreed to establish a working group to compare the Luxembourgian tax code with international standards. But the working group never actually came to fruition. Even back in 1997, Juncker displayed certain alacrity when it came to defending his country's tax laws. At the time, he held the rotating presidency of the European Council as Luxembourg's prime minister. Under his stewardship, the EU passed a Code of Conduct for business taxation rules aimed at "tackling harmful tax competition in the European Union." The code, though, is not legally binding -- a fact for which Juncker is also largely responsible. The European Commission may only penalize country's tax system if the savings it offers to companies are determined to be forbidden state subsidies and thus contrary to EU free trade rules.

The corruption of the world’s biggest currency dealers was laid bare on Wednesday when regulators imposed £2.6bn of fines on six major banks for rigging the £3.5tn-a-day foreign exchange markets....A second US regulator, the Office of the Comptroller of the Currency, also imposed separate fines on JP Morgan, Citi and Bank of America taking the day’s tally to £2.6bn. Andrea Leadsom, a Treasury minister, said people who have done wrong “will not be back in a dealing room on a big salary” and “everything that can be done to punish this type of behaviour” will be done.  She told BBC Radio 4’s Today programme: “It’s completely disgusting. I think taxpayers will be horrified ... I don’t know if corruption is a strong enough word for it.”  Leadsom said it was particularly bad that this was going on at a time when taxpayers were bailing out the banks.  Announcing the first ever co-ordinated regulatory action, the FCA’s Tracey McDermott, director of enforcement and financial crime, said: “Firms could have been in no doubt, especially after Libor, that failing to take steps to tackle the consequences of a free for all culture on their trading floors was unacceptable.”  The settlement was co-ordinated with the US regulator, the Commodities Futures and Trading Commission, which published transcripts of traders discussing foreign exchange rates on private chatrooms. In one, a trader writes “dont want other numpty’s in mkt to know”. The traders make remarks such as “nice job mate” and “yeah baby” as they discuss the rates.