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Tuesday, January 27, 2009

Economy in January, 2009

Today:
  1. Parliament paves way for single EU defence market
  2. Germany approves new stimulus package
  3. EU company statute clears first legislative hurdle

Parliament paves way for single EU defence market

15 January 2009
MEPs yesterday (14 January) approved new EU rules to open up national defence procurement to all European suppliers, raising hopes that more transparency and competition will be introduced to this sensitive market. But industry fears the move will damage R&D investment.

The European Parliament yesterday (14 January) adopted new legislation establishing a co-ordinated EU procedure for public procurement of defence and security goods. The directive also includes non-military goods.

It covers all public service contracts concluded between EU operators, with a minimum threshold of €412,000 for supply and service contracts and €5.15m for works contracts. It does not apply to intelligence-related or extra-EU contracts. source

My comment: I don't get it how this directive could damage the R&D investment, when it should do the opposite-it should stimulate domestic producers to invest into R&D to stay competitive. It's very odd one. In any case, I'd love to see European defence, no matter how much UK is opting out of it. Why should we arm against each other if we're one Union. I feel safe with my European neighbours, I don't need to make sure I have nukes for them. But the EU defence should go with a clause in the accession contract-if any EU member attack another member, it should be isolated from the Union completely-that means no goods, money or people going in that country until it won't get out of the attacked territory and pay reparation to that country along with some other form of penalty to the whole Union. This way, I think no one would be stupid enough to attack. But there must not be ANY doubt that the EU will defend the attacked country without any hesitation. Otherwise, no directive could fight our fears.

Germany approves new stimulus package

13 January 2009

Germany's coalition government yesterday (12 January) gave the green light to a €50 billion economic stimulus package, the largest for sixty years, comprising a mixture of subsidies, tax relief for families and investment in construction.

Combined with the €32 billion that German government had already approved last November, the package represents the largest in Europe, sending a signal to critics who thought the first stimulus plan did not go far enough to boost Europe's largest economy.

The package lowers the entry income-tax rate from 15 to 14%, is expected to relieve the tax burden by €9 billion annually, and will reduce health insurance contributions by 6%. In addition, parents will be granted a one-off €100 bonus allowance per child, while potential car buyers can count on a €2,500 payment for getting rid of their old vehicles.

Some of the fiscal measures agreed yesterday will come into effect on 1 July. source
My comment: I might not be an economist, but I fail to understand how you spend money you don't have. Of course it will increase your debt. Then why doing it? I agree with the social improvements like the reduced tax and so on-this is a logical stimulus. But I don't see why the government should pour billions in companies. Sure, reduce their taxes, create them a better environment to work and sell, but handing them money for me isn't a good idea. Sure, car-producers in Germany are good companies that are very unlikely to go broke, but still I thought there are laws in Europe against government money injections. (yeah, I don't sound like too much of a socialist, but socialism is about people, not about private companies that are rich enough to get out of the mess on their own)

EU company statute clears first legislative hurdle

22 January 2009

MEPs have given the green light to a European Private Company statute aimed at facilitating the establishment and running of businesses across borders. But they also introduced hurdles that small businesses say may prove difficult to overcome.

Sixteen members of the European Parliament's legal affairs committee on Tuesday (20 January) voted in favour of the European Commission's text. None voted against it, while the seven Socialists abstained.

In a move aimed at securing governmental approval, MEPs introduced a "cross-border component" to the text, obliging entrepreneurs to open businesses in at least two EU member states.

In the beginning, businesses will only have to indicate their intention to become cross-border. However, two years after the creation of the new firm, governments will have to verify whether the company actually meets cross-border criteria.

Parliamentarians also opted to improve employees' rights should their company choose to move to another EU country. According to the approved text, companies which have over 500 workers from EU member states that provide better working conditions, existing EU legislation rather than national law will apply, as foreseen by the Commission's text.

The committee agreed with the EU executive's proposal to fix the minimum capital requirement at a symbolic price of €1, but introduced the hurdle of a "solvency certificate", through which the newly-founded company proves it is able to pay its debts. If it fails to provide the certificate, the minimum capital requirement will be set at €8,000.

The draft approved by the parliamentary committee will now be voted upon in plenary in February or March. It must then be approved by EU governments. source

My comment: Ok, this one got me totally confused even if it sounds good. It's a total mess. Especially the workers part- do I understand correctly that if a company decides to move to another member state, it ought to obey the better requirements for the labour-local or European? That sounds odd and it's very close to "should pay them the better money". Which is a good move to demotivate people wanting to relocate their productions, but it's on the verge of protectionism in the heavy meaning. It's a weird one. For your pleasure and informaiton.

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