Seven Days in Europe

Global financial markets prepared for the euro’s endgame after the sovereign debt crisis spread to Germany, the “stability anchor” of the single currency, and investors shunned its government bonds. Europe’s biggest economy managed to sell only two-thirds of its 10-year bonds at auction. Opinion is divided as to Angela Merkel’s ability to steer Germany and Europe out of the crisis.

Amid widespread investor anxiety about the future, the European commission president, José Manuel Barroso, admitted that it would be impossible to save the euro unless eurozone countries agreed to strict controls from Brussels and the European Central Bank in their tax-and-spend policies. The European Commission unveiled proposals that while formal domestic lawmaking procedures are to remain in place, almost all fiscal policy decisions would be taken out of the hands of national assemblies and delivered up to European civil servants. The decision was greeted with consternation by member stares, who feel that such a move would create a democratic deficit.

Angela Merkel and Nicolas Sarkozy are to propose modifications to EU treaties to improve governance of the eurozone. The announcement came after their first meeting with Italian Prime Minister Mario Monti since he took office. Mr Sarkozy said they would “propose modification of treaties to improve eurozone confidence so there is more integration and convergence”. Mrs Merkel said they would not change the role of the European Central Bank. The modifications are to be proposed over the next few days, but no details have yet been released.  France and Germany disagree about whether the ECB should act as lender of last resort and whether bonds should be issued by the whole of the eurozone instead of individual countries.

A 24-hour strike in Portugal has grounded flights and halted public transportation in protest against proposed austerity measures. Air traffic controllers and workers on Lisbon’s metro system were the first to go on strike late on Wednesday. They were joined by hundreds of thousands of other workers, including teachers and hospital staff. Portugal is getting 78bn euros (£67bn; $104bn) in emergency funds from the EU and the International Monetary Fund (IMF). The Portuguese are not the only ones striking, EU staff unions have re-iterated their threat to go on strike after negotiations with the European Commission failed to produce an agreement on a new package of pay and pension changes.

The latest collapse in talks to form a government in Belgium has sent investors running, amid fears the core eurozone country could face similar problems to Greece. Belgian politics is worrying the markets (Photo: o palsson)The country’s cost of borrowing money soared over five percent on Tuesday to an almost-10-year high, after would-be prime minister Elio Di Rupo handed in his resignation on Monday, marking a preliminary end to a-year-and-a-half-long attempts to reach a deal. Belgian EU trade commissioner Karel De Gucht warned earlier this month that his country might be “next” on the markets’ radars if it did not manage to agree and draw up a budget for 2012. Belgium’s debt is almost at 100 percent of GDP – the third-highest in the eurozone.

However, while it has been a bad week for the eurozone, it has been a good one for computer users after the European Court of Justice has ruled that content owners cannot ask ISPs to filter out illegal content, ruling that attempts to do so undermines privacy rights and the ability of people to freely exchange information. The ruling could have implications for the creative industries as they attempt to crack down on piracy. The court said that while content providers can ask ISPs to block specific sites, wider filtering was in breach of the E-Commerce Directive.

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