Here, we'll do some live blogging giving you the latest news along with our take on the two key events unfolding throughout the day. All times will be in BST.
22.20 (London) - we're out. Tomorrow we'll publish a more detailed look at the Commission's proposal, comparing it to the current budget period (2007-2013) and giving our own ideas for how the EU budget should be reformed.
21.35 (Brussels/London) -
Barroso: "This is an extremely serious, credible proposal, and to say 'no' to something which was only adopted two or three hours ago is not serious or credible."
UK Treasury: "The European Commission's proposal is completely unrealistic. It is too large, not the restrained budget they claim, and incompatible with the tough decisions being taken in countries across Europe."
And they're off!
21.20 (Brussels) - the Commission's proposal includes an increase to administrative cost. Looks as if it's going from 5.7% to 6.1%. Naively, we had hoped for at least a freeze.
21.00 (Brussels) - 8% cut in CAP funding welcome but not nearly enough.
20.46 (Brussels) - So the Commission proposes a 2014-2014 EU budget of €1.025 trillion for 2014-20, up 5% from 2007-2013, But this does NOT include the EU funding that falls outside the actual EU budget.
20.41 (Brussels) - the Commission proposes a financial transaction tax (FTT) and an EU VAT to fund the EU budget . As we've argued before, an FTT is unlikely to work.
20.30 (Brussels) - press conference announcement: the EU budget will remain at 1.05% of European GNI (as expected) but will still increase in real terms (as expected).
20.08 (Brussels) - the Commission's press conference has started. From elsewhere we hear that under the Commission's proposal the long-term EU budget is itself up 5%, roughly €46bn. However, there's another substantial increase to the non- EU budget funds, possibly making for a more substantial rise in overall EU expenditure. But these are all preliminary figures. Stay put for more details.
19.00 (Brussels) - ahead of the Commisison's EU budget announcement, question remains what the size and shape of the budget will look like. As noted below, we suspect a limited increase to the actual EU budget (but still an-above-inflation increase) while a substantial overall increase when also counting the funds outside the EU budget.
18.02 (Brussels) - The Parliament reports that, only hours before Barroso's imminent announcement of the Commission's proposal for a financial transactions tax, a newly Commission-sponsored Eurobarometer poll has found that 61% of Europeans "are strongly in favour of a financial transaction tax". Coincidence. We think not!
17.34 (Brussels) - Commission's press conference to announce the budget now expected at 9pm Brussels time (8pm UK time).
17.30 (Brussels) - As riots continue in Athens, EU bureaucrats’ unions threaten their own strikes over raised pension age for Commission officials and some jobs cuts in the EU institutions – which Barroso is set to unveil. Unionised eurocrats will meet with Barroso on Thursday to discuss the proposal, they say strikes are on the cards. What a fantastic example they’re setting.
17.25 (Paris) - Meanwhile, we learn from the Élysée website that François Baroin is the new French Economy Minister. He may remain in office only for nine months (there are presidential elections in France next year), but in light of what is going on in the eurozone that could be a very long time... We also see that Jean Leonetti replaces the charming Laurent Wauquiez as France's Europe Minister. He becomes the fifth Europe Minister under Sarkozy's presidency!
17.00 (Berlin) - In a speech earlier today German Chancellor Angela Merkel implored German banks to take part in the second Greek bailout:
- Angela Merkel: "Banks should do it in their own interest in case they want to continue working in politically stable countries in the future."Ackermann has definitely been one of the most responsive CEO's to such calls for private sector involvement, but we can't imagine the majority will take his line. Interesting role reversal from the financial crisis to some extent, back then bank CEO's were issuing warnings to governments that they could bring down whole economies, now Governments are warning banks that the Greek crisis could bring down some of the big banks. (Obviously, this argument/discussion becomes very circular, but you can see our point)
- Deutsche Bank CEO Joseph Ackermann: "We are generally not thrilled about bearing a hand to politics but we know our responsibilities."
16.35 (Athens) - Looks like the fires have been put out at the Finance Ministry...for now.
16.15 (Athens) - Greek Finance Ministry on fire! Protesters have started fires at the bottom of the building, most likely in an attempt to have it evacuated. The tension within Syntagma square has been rising since the announcement of the vote. It looks to be becoming violent again with tear gas and stun grenades going off around the square.
15.46 (Brussels) - No more news regarding the Commission's budget announcement. The Commission's media centre still has the press conference with Barroso and Budget Commissioner Lewandowski as "TBC"...Commission expected to discuss its proposals with the European Parliament by 7pm. We should hear something after that.
15.10 (Brussels) - EU Presidents Herman Van Rompuy and Jose Manuel Barroso release a joint statement on the Greek vote. Welcoming the vote ("a message from Dexia" as Zerohedge pointed out), they note
Tomorrow, the eyes of Europe will again be turned towards Athens as parliamentarians are called upon to approve the implementing measures for the programme. A second positive vote will pave the way for the disbursement of the next tranche of financial assistance. It would also allow for work to proceed rapidly on a second package of financial assistance, enabling the country to move forward and restoring hope to the Greek people.14.55 (Berlin) - Some bland responses from German politicians when being told of the result (apparently they're happy):
- German Chancellor Angela Merkel:"That is really good news."14.35 (Athens) - This vote does help Greece avoid snap elections and a disorderly default, so is a good thing on that front. But its far from a solution to Greek problems and there are still plenty of questions which need to be answered. Off the top of our head here are five key questions still facing Greece and the eurozone over the next few months:
- Bundesbank President Jens Weidmann: "We’ve made an important step but we are not at the end yet."
- Bundesbank CEO Carl-Ludwig Thiele: "The problems were Greece’s fault. It is Greece’s duty to solve them- today it has made a crucial step."
- Can Greece enact the austerity packages at the individual policy level, ie. can they pass the vote tomorrow?
- Can a solution be found for private sector involvement in the second Greek bailout, which meets both the German and ECB requirements?
- If a second bailout package is suitably put together, will it meet the overall financing requirements of Greece and still gain acceptance from all eurozone governments? (admittedly two questions really)
- Will Greece be able to fully implement the austerity plan (meeting the EU/IMF/ECB 3 monthly reviews) and reach the estimated €50bn revenue from the privatisation plan? (especially keeping in mind the protests and political unrest we've seen today)
- Finally, even after everything, will Greece be able to escape its debt trap? (essentially running a high enough budget surplus to counteract its poor economic growth prospects - looks unlikely given the massive interest payments on its huge debt stock)
14.20 (Athens) - The final result: 155 (Yes) vs. 138 (No), with 2 abstentions and 5 merely saying 'present' (not sure what that means, but essentially an abstention). The required amount was 151, so in the end the government cleared it with relative ease.
14.18 (Athens) - Despite the violent clashes throughout the day there hasn't be an outcry following the result of the vote. In fact the result seems to have sucked the life out of the protests, at least temporarily, and there seems to be a lull in the square in front of Parliament. Again that could change, particularly as MPs begin trying to leave the Parliament building.
14.07 (Athens) - Greek government has secured the necessary majority for the austerity package, by (we think) a four vote margin. So, as expected the austerity package has been passed! Sure Papandreou is breathing a sigh of relief. But we can't help but feel that his problems are only just beginning. He now has to get through the potentially more explosive vote tomorrow on the specific policies included in the austerity package and privatisation plan. Not to mention actually meeting all the targets and negotiating the second bailout (and let's not forget that someone probably needs to sort out the Greek banking sector).
14.05 (Athens) - Currently 129 (Yes) vs. 120 (N0). One of the PASOK MPs who suggested he would vote against the package actually ended up supporting it. Looking more and more likely that the government will get the necessary votes...
14.00 (Athens) - Currently 114 (Yes) vs. 103 (N0).
13.50 (Athens) - Currently 55 (Yes) vs. 43 (N0). Already one dissident from the PASOK governing party and two so-called cross benchers voted 'no' as well.
13.45 (Athens) - Currently 20 (Yes) vs. 11 (N0). The vote is finally starting, with each of the 300 MPs voting one by one in a roll call vote. The Greek Prime Minister George Papandreou and the leader of the opposition party Antonio Samaras both had their final say, aiming significant criticism directly at one another. The PM accused Samaras of sitting on the sidelines and not doing enough to save Greece. In response Samaras suggested Papandreou was engineering a political breakdown in Greece. Papandreou got the last word in, but we doubt this political posturing changed anyone's mind.
13.30 (London) - A bit more clarity on the reports in today's papers that the Commission was planning a 12% increase to the 2014-2020 budget. It has been suggested that the figures leaked by the Treasury last night included the European Development Fund (one of the EU's aid programmes) and the Globalisation Fund. Although these are EU programmes, they are not funded through the EU budget and are agreed separately. This probably accounts for the 12% rise reported this morning.
13.23 (Athens) - After Finance Minister Evangelos Venizelos finishes his speech, the floor will go to the leader of the opposition Antonis Samaras, followed by Prime Minister George Papandreou. Members are then expected to start the vote. (courtesy of Ta Nea)
Live video coverage of the protests can be found here.
Follow the Greek protesters on twitter:
13.15 (Brussels) - Reuters is reporting that the Commission will propose an EU-wide tax on financial transactions (as expected) and a freeze in farm spending as part of its budget plans. The report suggests the proposed tax on financial transactions aims to raise up to €50bn specifically for the EU budget.
13.10 (Athens) - Vote now expected in about 20 mins. The Finance Minister Evangelos Venizelos is currently speaking in the Greek parliament, being predictably gloomy about Greek prospects if they do not agree to this package (although he's not completely wrong). He's been a stalwart of the PASOK (the governing party) line that all members must support the package, any dissidents would be expelled from the party, probably ending their political career (although the opposition party, New Democracy, has taken the same line to ensure all their members vote against the package).
13.00 (Brussels) - As all eyes are on Athens, looks as if the European Commission won't announce any details of the EU's long-term budget until later tonight, possibly around 7pm (Brussels time) after it has discussed with the European Parliament.
12.45pm (Athens) - There's already been a lot of discussion in the Greek parliament today, while the protests outside the parliament have got increasingly violent. There seems to have been waves of conflicts between protesters and police. The vote was scheduled for 12pm BST but has now been delayed after the discussions and speeches on the issue ran over. It's expected to happen soon (in roll call form) and should take about 45 mins to give a result (at least if all goes according to plan)