YEUr Tidbit: Mortgage Credit Directive (MCD)

April 28, 2013

Next up in the PIIGSty YEUr Tidbit Factsheet series, the Mortgage Credit Directive (MCD).

The MCD proposes a more integrated pan-European market for mortgages which gives borrowers more choice, stronger ability to compare mortgage products and greater protection while making cross-border mortgage lending much easier for banks. The EU home mortgage market is currently worth close to 50% of European GDP or €6.5tn.

Full version PDF here  YEUr PIIGSty Tidbit: Mortgage Credit Directive

YEUr Tidbit Mortgage Credit Directive


YEUr Tidbit: Single Supervisory Mechanism (SSM)

April 26, 2013

The Single Supervisory Mechanism (SSM)  is one step (of three) in achieving a full European banking union, a key part of the EU Single Market in financial services. The others are the Deposit Guarantee Scheme (DGS) and the proposal on Banking Resolution and Recovery (BRR).

Full version PDF of the PIIGSty YEUr Tidbit Factsheet here: YEUr PIIGSty Tidbit: SSM

YEUr Tidbit SSM image

YEUr Tidbit: The Multiannual Financial Framework (MFF) Q&A

February 10, 2013

Q1. What is the MFF?

The Multiannual Financial Framework (MFF) is a 7 year ‘big picture’ EU spending tool which will last from 2014 to 2020. It details the maximum level (ceilings) of what the EU expects to spend on its priorities to fund new and existing programmes such as Horizon 2020, ERASMUS for All, Connecting Europe Facility and the Common Agricultural Policy. It also ensures the annual EU budget is devised and spent correctly to achieve the best results for all EU taxpayers.

Q2. So, Its a big budget?

Not really. The MFF only sets out the upper limits (ceilings) of what the EU can spend; it doesn’t mean any money can yet be spent. As such, discussions over the MFF are more about politics than economics. Annual EU budgets add the missing specifics, usually at levels below the ceilings.

Q3. Why do we need the MFF?

Beginning in 1988 with Delors 1, multiyear EU funding packages sharpen the EU focus on headline programmes and priorities. For a Union of 27 Member States (soon 28 with Croatia joining on July 1 2013), there needs to be limits and coherence between annual budgets to make sure they are cost-effective and focus on what the EU hopes to achieve. The MFF will run alongside the EU2020 Strategy with shared priorities in the areas of employment, research and innovation, education, social inclusion and climate/energy.

Q4. What’s the process for reaching agreement on the MFF?

The three main EU institutions have a role in the process; the European Commission, European Parliament and European Council (Heads of State and Government). The Commission proposes while the Parliament and Council work together known as ‘co-decision.’ Roughly speaking, the process is as follows:

MFF Box-Graph_New1

The Commission (as the EU executive branch) proposes a package which sets out the terms for negotiation (called a ‘negotiating box’).  Discussions take place in the General Affairs Council (GAC) of EU Foreign Affairs ministers where Member States make their views known.

The proposal must first be passed by the European Parliament before being unanimously agreed by the Council (EU Heads of State and Government). Due to the requirement for unanimity, Member States through the Council have huge power.  Negotiations are led by the permanent President of the Council, Herman Van Rompuy as the real work lay in bridging the gap between Member States to reach collective agreement (reached last week). It will now go to the Parliament for consent.

Q5. I heard agreement wasn’t easy. How come?

In June 2011, the European Commission led by President José Manuel Barroso proposed a €1.025tn MFF but before that could come into force, the Commission, European Parliament and all 27 EU Member States through their Presidents/Prime Ministers (called the European Council) have to work together to achieve agreement on the political side. On the 7th of February/early morning of the 8th – the European Council finally agreed to a slimmed down €960bn MFF. This was not what most Member States, the European Commission or the President of the European Parliament (Martin Schulz MEP) most wanted. It now passes to the European Parliament for consent.

The MFF negotiations were mainly a tug o’ war between those Member States who contribute more than they get back (from benefits from the Single Market or rebates) and those Member States who need EU monies for infrastructural development or to boost their domestic economies . The two groups were as follows:

A. Friends of Cohesion – FOC

Goal: A big MFF with the same/more spending than before

  • States which see higher spending as benefiting them most and any reduction in this hurting them in equal measure.
  • 15 members mostly those new members who had joined in the 2000s plus Greece, Spain and Portugal.

B. Friends of Better Spending – FOBS  

Goal: A targeted, smaller, more efficient MFF

  • States who demand restraint and more efficient spending – mainly mature and stable economies.
  • 8 members in total.

The FOC had powerful friends in the President of the Commission José Manuel Barroso and European Parliament President Martin Schulz. They preferred the €1.025tn version and met a number of times to confirm/restate their position. The most recent ‘Joint Declaration’ by this group was in October 2012.

This excellent graphic from the European Commission/Financial Times sums up the positions well.


In negotiations, the two opposing camps fought it out. While it might be argued the Friends of Better Spending ‘won’ the argument, the devil is in the detail which is yet to come. Although yes, the Friends of Cohesion have 15 members (of 27), their economies represent only 19.3% of total EU GDP while the ‘Friends of Better Spending’ represent a whopping 74%.  The economic argument speaks for itself.


Source: Eurostat

YEUr Tidbit: The Connecting Europe Facility

November 18, 2012

Today, PIIGSty launches a new explanatory series ‘YEUr Tidbits’ which will seek (in true PIIGSty style) to simplify EU initiatives you may not have heard of. Where possible, we’ll link to official explanations, links to videos or articles. We begin with the ‘Connecting Europe Facility.’

The Connecting Europe Facility (Click for video)

Below in the audio transcript.

Europe and its citizens are linked by a web of transport, energy and telecommunications networks. Its dense, but its not complete. Gas and oil pipelines, electricity grids, railways to ports to airports and roadways are still not sufficiently connected. Nor is access to widespread access to broadband a reality. And Europe needs it all, if its to grow. Proposed by the European Commission in 2011, the CEF is a €50bn initiative to get Europe working better.

Without this kind of investment, it will not be possible to have these links. This investment will generate growth and jobs and at the same time, make work and travel easier for millions of European citizens and also for businesses.

  • Lets look at energy (€9.1bn). Around the North Sea, Europe already has the worlds largest offshore wind farms and Southern Europe has world class solar powered stations but how do we get electricity to the Worlds largest plane maker? Along one of 11 energy corridors that will cover the entire EU. And gas corridors with compressors will allow gas flows in both directions when gas supplies are disrupted. Keeping all Europe supplied, all the time.
  • In transport (€31.7bn) where we want to focus most of the investment, we need to make better links across borders and we need to make the most of different modes of transport. This means infrastructure investment in road, in rail and in remoter regions. Freight and passenger corridors will link Europe from the far north to Valletta and from Portugal’s Atlantic coast to France. And bottlenecks will be removed from road and rail hubs.
  • And in telecommunications (€9.2bn)  high speed broadband needs to be the norm for businesses and citizens alike – not just a luxury in super fast cities. Targeted investment stimulated through the EU budget is the way to join up Europe’s missing link. Project bonds are a way or making the most of public money by involving the European Investment Bank (EIB) and encouraging private sector investment. Europe needs to complete it connection well – and it can do it.

The CEF – connecting to grow.