1. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.CONTENTSWATCHTOWEREU MEMBER STATESWORLDWIDEINSTITUTIONSEPP VIEWSOUR COMPETITORS VIEWSFROM THE BLOGOSPHEREUPCOMING EVENTSANNEX www.thinkingeurope.eu

2. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks. Watchtower The GM-Saga A Euro-American Problem? Foreword by CES Head of Research The phone call came as a shock. Chancellor Merkel had just spoken to both Houses of Congress onthe occasion of the Fall of the Berlin Wall, praising America as the Land of the Free and provider ofhope to those living under communism, like herself, until 1989. She received standing ovations forcomparing the fight against climate change in our century to the fight against communism in the last.And on the way back to the airport, she was informed that the deal to have Opel sold by GeneralMotors to the Russian controlled investor Magna, with heavy German government subsidies, was fellflat and that GM was going to do the restructuring itself. Six months of off-and-on, up and downnegotiating between Opel personnel and management, the former Berlin government and thehesitant CEOs in Detroit. Thousands of jobs are in jeopardy. And no hint of all this in the Chancellorstalks to the US Government which by now owned a good part of GM. The fury in Germany wasalmost understandable. Some politicians saw the ugly face of turbo capitalism. Others lambastedGM for threatening to lay off German workers eight weeks before Christmas. But it was only almost understandable. True, the waffling in Detroit, where decisions were takenslowly and then revised several times, did not make things easier. And true, by European standards,the US Government might have exerted its influence over GM in a more favorable way. But this is thepoint: Whose standards count here? The administration in Washington does not want to interfere inany of its bailouts for fear of appearing socialist to American voters. And what is even more importantin this context: German firms that have invested billions overseas, also sometimes take wrongmanagement decisions, some of them are partly owned by the German government, and sometimesthey even lay off foreign workers. The logistics provider DHL (owned by Deutsche Post of which onethird is in the hands of the Federal government) sent thousands of employees to the dole inWilmington, Ohio, in November 2008, five years after having cashed in half a billion USD in Americansubsidies. And a few days before Thanksgiving! Of course, the GM-Opel-Magna drama has many more aspects than this. And the frustration of theGerman government is legitimate, after having invested so much; if not in money (the subsidies areoff, for the moment) then in time and political energy. On the other hand, the European Commissionhad legitimate questions as to whether Berlins planned subsidies were in conformity with EUcompetition rules. But above all, a self-righteous attitude about American turbo capitalism vs. theEuropean Social Model is completely besides the point. Next to saving jobs, our priority in thisrecovery must be to facilitate the creation of new ones. And that, for one thing, is equally valid onboth sides of the Atlantic Ocean. www.thinkingeurope.eu

3. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.EU Member StatesAustriaThe Austrian steelmaker Voestalpine will apply for a state loan guarantee of 300 million euros. Thegroup will be asking for the maximum amount possible under the Austrian law, in which thegovernment set aside as much as 10 billion euros of loan guarantees for Austrian companies in anattempt to ease the credit crunch. A spokesman for Voestalpine said the company had no urgentliquidity need but was still encountering a difficult market for long-term credit, which the governmentguarantee would help to address. Meanwhile, Austria and Luxembourg are blocking the adoption ofan EU anti-fraud agreement with Liechtenstein, because of concerns that their banks will be left at acompetitive disadvantage. They are also opposing mandates for the European Commission tonegotiate similar agreements with Andorra, Monaco, San Marino and Switzerland.BelgiumFranco-Belgian bank Dexia is awaiting the final approval from the European Commission for last years6.4 billion euro bail-out provided by the common efforts of Belgium, France and Luxembourg. NeelieKroes, EU competition commissioner, who approved other rescue packages at the height of thefinancial crisis, is now scrutinising restructuring plans to see they do not distortcompetition.Sheisexpected to decide on Dexia before the end of the year. Pierre Mariani, CEO ofDexia, declared in a press conference that he is optimistic about the decision. Dexia, under theleadership of the new CEO appointed in the height of the crisis, went under a major restructurationthat included the dismissal of the insurance branch FSA and a progressive reduction in Dexiasparticipation in Credit du Nord.BulgariaFinance Minister Simeon Djankov handed over the 2010 draft budget to the Parliament andsurprisingly stated that next years budget envisages more spending in the health care, environment,domestic security and justice sectors. In fact the budget bill imposes a freeze on pensions and publicsector wages and envisages less spending on almost all sectors, ranging from health and education todefence. The government has set a fiscal deficit at BGN 465.7 M or 0.7 per cent of GDP next year butwill target a zero gap in a bid to speed up euro zone entry. The state aid, the main share of which willcome from the EU budget, is planned at 2,000 million leva. The government expects the economy toshrink by 2 per cent next year after contracting by 6.3 per cent in 2009. This improvement can beexplained by the recovery in Germany and Western Europe in general. One of the negative effects ofthe crisis is that the number of bankruptcies in Bulgaria has increased by 141 per cent compared toSeptember 2008. The most bankruptcies have been registered in the agriculture and municipaleconomy. www.thinkingeurope.eu

4. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.CyprusRevenue from tourism in Cyprus fell by 19.1 per cent over the year earlier to 200.2 million euros inSeptember, compared with 247.4 million euros in September 2008. This was partially caused by theweak sterling, since the UK still accounts for more than half of all tourists. Moreover, Cypriot industrialturnover recorded a decrease of 11.7 per cent compared to July 2008. The good news is that theEuropean Commission approved a Cypriot scheme using special government bonds to reinforcestability in financial markets and mitigate the effects of the crisis. The measure is limited in time andscope, requires adequate remuneration and foresees sufficient safeguards to minimise distortions ofcompetition. Under the scheme, Cyprus would issue special government bonds that it would lend tocredit institutions to use as collateral to obtain liquidity from the European Central Bank (ECB) and oninterbank markets. The special bonds would pay no coupons and would have a maturity of maximumthree years.Czech RepublicIn the first reading, the Czech Chamber of Deputies passed the fundamental parameters of the 2010state budget with a deficit of 162.7 billion crowns, which is 5.3 per cent of GDP and will be approvedin the final reading in December. The cuts made by the government and the approved anti-deficitausterity package made it possible to cut the deficit from the threatening 230 billion crowns toapproximately 163 billion. The budget counts with a 0.5 per cent economic decline and projectsrevenues at about 1,022 billion crowns and expenditures at 1,185 billion crowns. The ChristianDemocrats (KDU-CSL) and Social Democrats (CSSD) want to make additional payments to farmers, topreserve maternity allowances at this years level and to give more money to the operators of socialservices. The public finance deficit in 2010 should be 5.3 per cent of gross domestic product (GDP) incomparison the 6.6 per cent GDP deficit this year. However, the Czech Republic will still not meet thecriterion for euro adoption which sets a limit for the deficit at 3 per cent of GDP.DenmarkAccording to the latest figures from Statistics Denmark, the number of unemployed people grew by9.200 people from August to September and reached 113,500, the equivalent of 4.1 per cent of theworkforce. The combined debt of the countrys 25 largest companies has also grown and has almostdoubled in the last five years from 326.7 to 642.7 billion kroner. Surprisingly, the country hasexperienced the lowest level of inflation in almost five years. Another news is that Karsten Ree, theformer owner of Den Bl Avis (a buy, sell and exchange newspaper which he sold about a year ago), isgoing to help save Amagerbanken which has long been on the brink of collapse. It has just announceda terrible financial report for the first nine months of the year with a deficit before tax of 719 millionkroner. Now, the bank negotiated a deal in which Ree will invest between 250 and 500 million kronerin connection with an expansion of Amagerbankens base capital. The bank is looking to get 1.4 billionkroner in loan capital from the state. www.thinkingeurope.eu

5. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.EstoniaFollowing a credit boom, the Estonian economy is now undergoing a severe recession. However, afull-fledged crisis has been avoided due to existing buffers and a determined response by both thepublic and the private sector. An IMF report released on 26 October and praising the countrys fiscalmanagement said that the euro adoption in 2011 appears within reach. Following an extraordinaryfiscal effort, the 2009 budget deficit is likely to remain close to its target of 3 per cent of GDP. Keepingthe 2010 deficit below the Maastricht deficit limit presents a key challenge. But euro adoption is nopanacea and the economic outlook remains challenging. Efforts both by the government and theprivate sectorshould focus on consolidating economic stability and laying the foundations forsustained growth.FinlandDespite the forecasts of an upturn in the global economy, the Research Institute of the FinnishEconomy (ETLA) does not expect orders for the Finnish technology industry to show any quickimprovements in 2010. The reason for the pessimism is the depressed state of investments. In thethird quarter of this year, technology industry companies got 40 per cent less orders than they did ayear ago, according to a report from the Federation of Finnish Technology Industries. Next year couldbe even worse than this year for engineering works, which have managed to maintain employmentthis year by delivering goods that had been ordered before the slump. In mobile phone industry thedark market forecasts of the early part of the year have taken a more positive turn, but next yearsprospects remain gloomy. During the recession gloomy also is the Finnish motorists eagerness toconsider the environment when choosing a car. Only 7 per cent of the car buyers appreciate lowemission rates and environmental friendliness in comparison to last years 13 per cent.FranceThe French government announced that it will add new fees for its financial industry in order to payfor increased supervision. Christine Lagarde, French finance minister, excluded the possibility of a 10per cent tax on capital profits. This proposal was recently approved by the financial committee of thelower chamber of the Parliament. Mrs Lagarde already denounced the disruptive potential of thisproposal strongly supported by Didier Migaud, Socialist president of the finance committee. Theindustry opposes the Watchdog tax as unjustified and warned that it would severely hit profitabilityjust as the banks prepared to set aside increased amounts of capital to meet new regulatoryrequirements.GermanyGerman business confidence rose for a seventh consecutive month in October as Europes largesteconomy showed more signs of recovery and firms outlook for exports improved. The most recentforecasts say that the economy will grow by 1.2 per cent next year after shrinking 5 per cent in 2009.However, Germanys leading institutes have warned that the pace of economic recovery is"unsustainable" and that the countrys banks may face a fresh crisis over the next year as bad debts www.thinkingeurope.eu

6. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.surface. Germanys new centre-right government is charting a pro-business course to focus onlowering tax and bureaucratic hurdles on companies, and on boosting private consumption as thefastest way to drag Germany out of the economic crisis. The government will appoint the Bundesbank,the German central bank, as sole regulator for banks and strip Bafin, the financial market watchdog, ofits banking remits. Germany has recently assured General Motors and the Opel Trust that its 4.5 billioneuros offer in financial aid for Opel is not tied to the choice of an investor or a plan. The Commissionsaid that there were significant indications that the promised aid was subject to a pre-condition thatMagna and Sberbank was selected to buy Opel, in breach of strict EU state aid and internal marketrules. The bad news is that German mail-order company Quelle is shutting down more than 80 yearsafter revolutionising the countrys retail landscape.GreeceThe Greek Socialist government decided to end a car scrapping scheme in place for older vehicles,while maintaining at high levels the road tax set by the previous government for a large number ofcars. This move is certain to raise objections by sector professionals who had based their businessplans on the scheme, as well as sparking complaints from citizens who had heard the Greeces FinanceMinister Papaconstantinou in the last few days say that there would be changes to the measures, butnot its abolition altogether. Meanwhile, Environment Minister Birbili said that a plan forenvironmentally friendly vehicles only being allowed in the city center is also being withdrawn.However, the European Commission seems reluctant to accept the estimates by Mr Papaconstantinouthat the deficit will slide to 9.5 per cent next year. At the same time, an EFG Eurobank analysissuggested that the public debt this year will reach 114.6 per cent of GDP before soaring to 126.5 percent in 2010.HungaryHungary posted a 254 million euros trade surplus in August. The figure exceeds the preliminaryestimate of 229 million euros. In August, euro-term exports fell 20.3 per cent and imports decreased26.9 per cent compared to August a year earlier. In October, recovery was less convincing than in Julyand August, but it brought back the upward trend. However, figures from the Central Statistics Officeshow unemployment rose to 10.3 per cent on average in July-September this year, a rate last seenmore than 13 years ago when the unemployment rate was 10.6. Unemployment could peak at 11 percent at the end of 2009 and possibly at 11.5 per cent in the first months of 2010. Hungary also plans tosubsidise the installation of new production lines for next-generation engines and engine componentsat the plant. But the European Commission opened a formal investigation into HUF 14.9 billion ofHungarian state aid for a HUF 153.4 billion investment by Audi Hungaria Motor at its plant in Gyr.The Commissions preliminary investigation revealed doubts that in some markets for passenger carsthe 25 per cent market share threshold of the regional aid guidelines would be exceeded. www.thinkingeurope.eu

7. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.IrelandThe Irish government announced a plan to cut 1.3 billion euros in the public-sector pay bill through acombination of reform, pay cuts and pension changes. The Government also declared that will try togenerate the anticipated 1.3 billion euros reduction through reform rather than by pay cuts. Socialpartners will meet with the Government in an intensive session of discussion to discuss theimplementation of the plan and the consequences for civil servants in Ireland.ItalyItalian Prime Minister Silvio Berlusconi said on 16 October that works on a bridge connecting Sicily tothe Italian mainland will begin between December and January. According to the Italian governmentthis bridge would constitute a crucial development for North-South trade in Europe, allowing fasterconnections with Sicilian ports in the Mediterranean and Europes industrial core. Developments onthe bridge were blocked for 3 years after the centre-left Prodi government dismissed the project in2006. On the other hand, Italy is to take a more cautious position on public spending in order to dealwith the disproportionate national public debt. Voices over a conflict between Mr. Berlusconi andGiulio Tremonti, Minister of Economy, were dismissed on the 22 October. The Italian PM, initiallyfavourable to a gradual reduction of a key business tax declared that the solidity of the Italys financesis a vital aim of this government.LatviaOver the past year, Latvias economy has shrunk by almost a fifth; its jobless rate has risen to 17.4 percent and house prices are down by two-thirds from their peaks. Extraordinary international effortshave kept Latvia from disaster. Still, neither the government, nor outsiders such as the IMF andEuropean Commission, can agree on what to do about it. However, after a catastrophic decline (alikely 18 per cent this year), the economy should start growing in late 2010. The collapse in imports ishelping balance the books. Having had one of the biggest current-account deficits in the world relativeto GDP, Latvia now has one of the biggest surpluses. The national currency, the lat, is still pegged tothe euro. The government wants to keep the peg, as do a large majority of Latvians. But despite a bail-out worth several billion euros from the European Union, the IMF and others, some members insidethe IMF think that devaluation is inevitable. But other economists reckon the damage to credibilitywould outweigh the gain to competitiveness. Meanwhile, the government reached agreement on thekey measures to reduce spending and increase revenue in the 2010 state budget and so reduce theplanned deficit of 500 million lats. The budget revenue is to be raised mostly through increasing thebase rate of the personal income tax and expanding the property tax base. Latvias president said thatthe parliament is likely to back the 2010 budget, a key part of efforts to ensure the Baltic statecontinues to get loans from a 7.5 billion euro rescue. An IMF and EU mission is due to carry outanother review of the loan programme in November.ThefNetherlandsING, the Dutch financial services group, announced that it dismisses its insurance and investmentmanagement businesses to focus solely on banking following the intense pressure from the European www.thinkingeurope.eu

8. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.Commission over state aid. The Dutch group had already declared in the past its willingness toabandon its bancassurance model by splitting the management of banking and insurance at boardlevel. But the latest news goes substantially further than expected and also includes a requirementthat ING sell ING Direct USA, its US direct bank. Meanwhile, Iceland declared on Sunday 18 October ithad agreed to a new deal to repay Britain and the Netherlands billions of dollars of deposits lost whenthe Icelandic banks collapsed in 2008, paving the way for new aid from international lenders and liftinga hurdle for its EU accession bid.PolandAccording to the Polish Customs Service, Poland has imported less than 600,000 used cars importedless than 600,000 used cars since the start of the year a 40 per cent decrease when comparing to2008. The results also show that the economic slowdown is starting to affect Polands internalconsumer market, resulting in a predicted slower GDP growth of 1.1 per cent, as opposed to the 5 percent growth in 2008. Retail sales in Poland have also risen less significantly than previously expected.The results highlight the weakening consumer demand due to higher unemployment levels and salarydecreases. While Poland has avoided recession, rising unemployment, which reached 10.9 per cent inSeptember, has resulted in pay cuts and salary caps in many companies. On the other hand, moreoptimistic news is that the European Commission representatives have revised the economic forecastfor Poland and now they estimate 1.6 per cent GDP growth in 2010 - a figure twice as high as theprevious forecast.PortugalPortugals GDP grew 0.3 per cent in the second quarter of 2009 compared to the previous three-month period after three quarters of consecutive contraction, the National Statistics Institute (INE)said. In its final estimate, the institute said GDP contracted 3.7 per cent year-on-year in the secondquarter of 2009, compared with a contraction of 4 per cent in the January-March period this year.RomaniaRomanias approval of a 2010 budget by 10 December is essential for Bucharest to receive quickly athird tranche of aid from the IMF. Mihai Tanasescu, Romanias IMF representative in Washington, saidhe saw a 50-50 chance of the IMF disbursing the 1.5 billion tranche, while analysts said politicaljostling ahead of a 22 November election could birth a quick budget deal. Romania needs the aid toshore up its finances and avert further upheaval after the crisis sent its economy spinning lower 8.7per cent in the second quarter.SlovakiaIn its most recent economic review, the Slovak Central Bank (NBS) states that current developments inSlovakias industrial production show a real improvement in the Slovak economy. On the other hand,the rate of registered unemployment in Slovakia reached 12.45 per cent at the end of September, asreported by the Central Office of Labour, Social affairs and Family. Meanwhile, the Slovakias www.thinkingeurope.eu

9. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.Parliament, in a fast-track proceeding on October 27, approved a revision of the 2009 state budget totriple the deficit. This is now predicted to reach 3.154 billion euros in 2009; the original figure was1.009 billion euros. The 2010 state budget will be discussed at the Parliaments plenary session. A non-profit organisation, the Slovak Governance Institute (SGI), which promotes transparent and effectivepublic services, has launched an on-line petition urging decision-makers to amend next years draftgovernment budget. Its petition has the phrase So that we are not left indebted, stupid and withoutjobs and is asking MPs to set up a fund to provide state aid for strategic investments in Slovakias less-developed regions, to increase allocations for schools and universities, and to provide a basic packagefor bankrolling science at least equaling the level of 2009.SpainSpains Prime Minister Jose Luis Rodriguez Zapatero is under attack from some of his own left-wingallies, who accuse him of a haphazard response to the economic crisis and of surrounding himself withyes-men. While there is a left-wing consensus supporting the broad sweep of government policy,which includes a massive public works program that will push the fiscal deficit this year close to 10 percent of GDP, there is concern that little is being done to prepare for the day the stimulus is withdrawn.Moreover, unions representing more than 7,000 workers at Opels Spanish plant in Figueruelas votedfor an initial four one-day strikes against plans by Magna to scale back production at the facility. Theaction, scheduled to start on 28 October, follows weeks of talks between Magna representatives,Spanish politicians and labour leaders. Lastly, a recent report by the real estate analysts RR de Acua yAsociados said it could take six years to absorb the countrys oversupply of housing. Standard andPoors credit rating agency predicted in June that the market would remain in despair until 2012. Theconstruction boom that had made Spain one of Europes fastest growing economies slowed to astandstill in the economic crisis.UnitedcKingdomBritains economy contracted in the third quarter of this year, turning down hopes the downturnwould end soon, instead marking the longest recession on record. The data released by the Office forNational Statistics underlined the fact that British gross domestic product fell by 0.4 per cent betweenJuly and September, meaning the economy has contracted for six successive quarters for the first timesince records began in 1955. Pound Sterling fell sharply and the recent data showed that the UKeconomy unexpectedly contracted in the third quarter. As a result, the British currency erased earlygains, falling 0.8 per cent to $1.6482 against the dollar. It dropped 0.8 per cent to 0.9113 against theeuro and lost 0.3 per cent to Y151.25 against the yen. Alistair Darling, the Chancellor of theExchequer, hit back and stuck to his forecast that the economy will be growing again by the end of theyear. www.thinkingeurope.eu

10. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.WORLDWIDEBrazilBrazils currency and stocks fell sharply on 21 and 22 October after the government imposed a 2 percent tax on foreign portfolio investments to constrain the rapid rise of its exchange rate. The movefollowed steady gains in Brazils currency, the real, which has advanced 36 per cent against the USdollar this year, reducing the competitiveness of Brazilian exports. The Authorities declared that themeasure will not have any impact on foreign direct investments, and pointed out that similarmeasures have been put in place successfully in other countries in order to limit speculation. Localinvestors and consumers seem to be extremely confident in their economic outlook as proven recentlyin a survey by Nielsen that sees Brazil leading the global chart on consumers and investors confidence.ChinaHaruhiko Kuroda, president of the Asian Development Bank, said on 25 October that China, Japan andother East Asian countries must strengthen currency co-operation to prevent a recurrence of violentfluctuations that have raised trade tensions in the region. In a period of economic turmoil, currencymovements threaten the growth of trade between Asian countries. Kuroda declared that a coherentstrategy to support inter-Asian trade represents a key way of reducing the regions reliance on exportsto the US and Europe. Contemporarily, a border dispute increases the pressure at the Tibetan borderbetween India and China. Dueling territorial claims along this heavily militarised mountain border,coupled with economic tensions between the two nations, are kindling a 21st-century rivalry. Theincreasing distrust has created a dilemma for neighbouring countries about how to court one nationwithout angering the other.IndiaMicrofinance industry continues to expand in India despite last years global financial meltdown, themain reason is to find an influx of private equity and bank funding, according to a new study.Microlenders recorded a 60 per cent increase in clients in India, mainly for projects directed tofostering entrepreneurship and trade. However, the relations between local communities andmultinationals remain tense in Northeastern India. Steel companies have invested billions of dollars toexpand in India, but they are struggling to secure the land they need in two mineral-rich statesbecause of intense opposition from local tribes and cumbersome government procedures. Thestandoffs in the northeastern states of Orissa and Jharkhand have hit two of the worlds top five steelproducers, ArcelorMittal and Posco, and are threatening to stall a key driver of Indias industrialactivity in the years ahead.UniteddStatesMore industries in the U.S. are experiencing an increase in demand and profits. This represents afurther signal the economy started growing again in the third quarter after a prolonged recession. www.thinkingeurope.eu

11. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.In its latest industry survey, the National Association for Business Economics said the improvedoptimism had pushed its net rising index (NRI) for demand to 23 in the July-September quarter, thefirst time it had risen in five quarters. However, statistics regarding the financial sector reveal a darkerscenario. The number of bank failures in the United States since the crisis began reached 106 on 23October. Seven more small banks closed, marking the highest annual level of failed institutions since1992 during the savings and loan crisis. Furthermore, Capmark Financial Group, one of largestcommercial real-estate lenders, filed for bankruptcy protection in Delaware, the latest sign thatproblems in that market are far from over.INSTITUTIONSEuropean Union: The EU is emerging from recession, with GDP growing in the second half of theyear. However, with the downturn at the start of the year, the forecast for 2009 as a whole remainslargely unchanged: GDP is expected to fall by 4 per cent. Looking ahead, the economy is likely toexpand just 0.75 per cent in 2010 and 1.5 per cent in 2011. The rebound stems mainly fromimprovements in world trade and in financial conditions. Both monetary policy and governmentspending are also driving the pickup in activity. Unemployment is set to reach 10.25 per cent in 2010and public deficit will likely rise to 7.5 per cent of GDP in the EU. The recovery could be surprisinglystrong in the months ahead. Whether it can be sustained remains to be seen.Eurogroup and ECOFIN: The finance ministers met on 19 and 20 October in Luxembourg toassess the outcome of the IMF annual meetings and how to best enhance the euro area voice andrepresentation in the IMF and at the G20. Ministers also prepared a contribution to the G20Ministerial meeting of 6 - 7 November and discussed economic and financial developments, includingexit strategies. The Council adopted conclusions on a coordinated fiscal exit strategy across countriesin compliance with the Stability and Growth Pact. Dependent on further economic recovery forecasts,2011 would be the latest start date for fiscal consolidation requiring efforts above 0.5 per cent of GDPfor most countries. The Council also reached broad agreement to create a European Systemic RiskBoard as part of the reform of the EU financial services supervisory framework and referred this issueto the European Council. On the anti-fraud agreement with Liechtenstein and the negotiating mandatefor the Commission, the Council broadly agreed on their substance and will come back to the issue inDecember.European Commission (EC): On 20 October, the European Commission launched a consultationon how to put European banks on a level playing field and spread the burden of future crises. Two keyareas of the consultation will be whether institutions can commit to the same rules on insolvencyprocedures and transfer assets to struggling subsidiaries. The guidelines aim to form the basis of afully-fledged EU proposal on regulating cross-border banks, following the consultation with thebanking sector and with lawmakers. The consultation has already been welcomed by some www.thinkingeurope.eu

12. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.stakeholders but experts raised serious doubts over how the EU will convince member states to agreeto the collective responsibility of bank rescues.European Parliament (EP): Keeping an open mind on how best to regulate financial markets wasone of the battle cries at the inaugural meeting of a special committee on the financial crisis in theEuropean Parliament. The committee will have no legislative power but will make recommendationsto the European institutions at the end of a 12-month mandate. Another committee that addressesthe financial and economic crisis is the Employment Committee. Its Members backed microcreditloans in order to help small businesses and people who want to be self employed. Although pioneeredin the developing world, members are convinced that microcredits can create jobs and boostenterprise in Europe. In particular they could help people who are unable to access conventionalcredit, especially at a time of economic crisis.Committee of the Regions (CoR): On 25 October, the Lisbon Monitoring Platform of theCommittee of the Regions launched the online survey, "The European Economic Recovery Plan inRegions and Cities: One Year On". The aim of the survey is to assess the impact of the economic andfinancial crisis at local/regional level, to provide an initial evaluation by local and regional authoritiesof actions taken on the ground under the European Economic Recovery Plan (EERP), and to stimulate adebate on past, ongoing and future anti-crisis measures and the involvement of local and regionalauthorities. The results will be presented early next year at the 2010 Territorial Dialogue. All EUregions and cities are invited to participate in this survey by 30 November 2009. ddddddddddEuropean Central Bank (ECB): According to a bank lending survey carried out by the ECB, itshould now be easier for enterprises, households and consumers to access funding, as fewer eurozonebanks reported a tightening of credit standards in the third quarter of 2009. However, demand forloans by firms continued to decline, the survey found. The percentage of eurozone banks reporting atightening of credit conditions to firms fell to 8 per cent in September, in comparison with 21 per centin the second quarter of 2009. Of the 118 eurozone banks surveyed by the ECB, only nine recordedworsening conditions in their loan activities to firms. All the others reported an improvement "bringingthe net tightening close to a halt".EPP ViewsThe EPP Summit on 29 October addressed, besides the ratification of the Lisbon Treaty and theclimate change, also the economic and financial crisis which still poses a threat to social cohesion inmost of the Member States. This was also highlighted by EPP Group Vice-Chairman Marian-JeanMarinescu MEP in the plenary debate on 21 October during which he underlined that at present;already 17 out of 27 Member States will have to face a deficit procedure from the EuropeanCommission as their www.thinkingeurope.eu

13. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.national budgets excessively violate the stability criteria. The next day, on 22 October, the EuropeanParliament voted on the first reading of the EU budget for 2010. Lszl Surjn MEP, EPP GroupRapporteur called for raising the expenditures of the 2010 EU budget because the 120 billion eurossuggested by the Council is not sufficient. The first reading of the parliamentary proposal sets out a 12per cent increase compared to the 2009 EU budget. In the meantime, the EPP Group welcomed thecreation of an ad hoc committee in the European Parliament on the economic and financial crisis tofind solutions to the serious economic crisis that we are facing and to analyse the impact anddimensions of the crisis in the European Union and its Member States. With the recent agreement ofEU Ministers for Agriculture and Commissioner Fischer-Boel to make available 280 million euros forthe creation of a new EU milk fund, an important demand of the European Parliament has beenfulfilled. However, attempts by the Socialist Group in the European Parliament to use the milk fund forunrealistic demands thereby risking its coming-into-force were unacceptable to the EPP Group.OUR COMPETITORS VIEWSS&DAn S&D initiative in Strasbourg to defend the call for a 600 million euro new fund was finally foiledby the opposition from the EPP. As the EPP Rapporteur on the Budget, Lszl Surjn himself said, theEuropean Parliament could only vote on "300 million euros or nothing". Technicalities prevailed overpolicy consistency. As a result of that, the S&D reluctantly voted to secure the 300 million euros. Someweeks earlier, Socialist and Democrat Euro MPs backed the introduction of a financial transaction taxto support the recovery of the world economy. Following the G-20 in Pittsburgh a EuropeanParliament resolution calls for "speedy progress" on this issue. S&D spokesperson on economic affairs,Udo Bullman said: "Citizens and taxpayers have so far borne the cost of the financial and economiccrisis. It is time that those who actually plunged the word economy into recession should pay theirshare for the repair job." The S&D group also expressed satisfaction at commitments by world leadersto strengthening financial supervision and regulation in Pittsburgh.ALDE/ ADLEOn 22 October in Strasbourg, Liberals and Democrats backed re-establishment of the budgetaryfigures proposed by the Commission for most of the areas cut by the Council and in some cases goingfurther for those budget lines aiming to increase future competitiveness and research. "Councils firstreading lacks coherence and realism," stated Anne Jensen, an ALDE group spokesperson on the budgetcommittee. "It is the case that many Member States currently have budgetary problems but we wontbe able to assist in the exit from the crisis if we cut investment from innovative energy projects orefforts to combat climate change or in the area of research. These are the Unions priorities and theyneed to be properly financed in the framework of relaunching the European economy." www.thinkingeurope.eu

14. Centre For European Studies ECONOMIC RECOVERY WATCHLast updated on 03/11/2009 To view full articles click on hyperlinks.GUE/ NGLWhile expressing his support for the extra 3 billion euros for structural funds and social programmes inthe draft budget for 2010, Portuguese GUE/NGL MEP Miguel Portas criticised the fact that this wasnot an extraordinary budget for exceptional circumstances. "Theres no point in following policies thatwill only end up being a drop in the ocean. We need a strong rural and social policy in coordinationwith national policies so that we confront the problems head-on" he said, adding that "there is enoughmoney if we begin to investigate tax havens and tax dodgers." Portas finished his intervention with acall for a total review of the system for MEP expenses and allowances, demanding thatParliamentarians "set an example".FROM THE BLOGOSPHEREWhy curbing finance is hard to do: Martin Wolf comments on the debate on prudential regulationsand the regulatory challenges set by the financial crisis.Privatising Royal Mail - now is not the time: Ian Senior (for IEA blog) comments on the project ofliberalisation of postal services in the UK.Competitiveness gaps test unity of the eurozone: Tony Barber analyses the threats to economiccohesion and protectionist measures in response to the crisis.UPCOMING EVENTSEvent: G20 Finance Ministers and Central Bank Governors MeetingDate: 6 - 7 November 2009, St. Andrews, ScotlandEditor: Roland FreudensteinffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffResearch Assistance: Katarna KrlikovccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccAdditional Assistance: Xochil Guillen, Vincenzo ConfortivvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvDesign: Jos Luis FontalbacccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccQuestions and comments: briefs@thinkingeurope.eu www.thinkingeurope.eu

15. Centre For European Studies ECONOMIC RECOVERY WATCHAnnex World Economic and Financial Surveys World Economic Outlook: Sustaining the Recovery October 2009The World Economic Outlook (WEO) presents the IMF staffs analysis and projections of economicdevelopments at the global level, in major country groups (classified by region, stage of development,etc.), and in many individual countries. It focuses on major economic policy issues as well as on theanalysis of economic developments and prospects. It is usually prepared twice a year, asdocumentation for meetings of the International Monetary and Financial Committee, and forms themain instrument of the IMFs global surveillance activities. www.thinkingeurope.eu