Europe sweetens the pill for Spain

Spanish bonds will get cheaper, but the EU wants control of the banks in return

At an extremely late hour in the day, the European summit appears to have agreed to modest, but important, changes in the structure of European bailouts.

The most important alteration for many is the fact that the funds provided to Spain by the European Stability Mechanism (annouced on the 9th and formally requested on the 25th) are to be provided without seniority. Previously, loans from the ESM are given subject to a proviso – enforced through convention rather than legality – that they are to be repaid before any other loans.

This is problematic for countries in trouble, since it makes it a lot harder for them to receive other funds. If you are a private investor, the last country you want to lend to is one which, if it goes bust, has to pay off a €100bn+ loan to the European Central Bank before you see a penny. As a result, when Spain first announced it was planning to seek a bailout, the first thing to happen was a spike, of around 5 per cent, in its bond yields (the cost of borrowing).

It now appears that seniority is to be "renounced" for the ESM's loan to Spain. It may still have implicit seniority – in any bankruptcy, the debtor has some choice of the order in which they pay off creditors of equal status, and Spain is unlikely to want to piss off the EU too much – but private lenders will be able to feel slightly more comfortable in giving money to the country. The question for the ESM now (and there are always further questions) is whether this is a one-off exemption, or new policy. And if it is new policy, can it be applied retroactively? Spain is, after all, not the only country with a bailout from the EU.

The summit also agreed to allow funds from the bailout to be injected directly into Spain's banks. The statement from the summit affirms that "it is imperative to break the vicious circle between banks and sovereigns," and that the ESM should be allowed to recapitalise banks. Previously, the money would have gone directly into a Spanish government vehicle, which would have paid out to the banks; the ESM is now capable of skipping that step, which should save everyone some time and money.

More important than what the EU has allowed, though, are the concessions it has demanded. Instead of there being 17 different banking supervisors throughout the eurozone, there will now be just one, a major step towards the creation of a pan-European banking union. The big change is that Eurozone authorities –  for which, read "Germany" – will now be able to force struggling banks throughout the Eurozone to recapitalise, rather than waiting for the individual sovereigns to decide. 

Angela Merkel is happy. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The Manchester attack will define this election: Broadcasters have a careful line to tread

It's right that the government should be given a chance to respond, but they must not be allowed to use it to campaign.

Every election campaign has its story, its place in the political history of this country. 2017 will forever be known for Manchester and the horror of the attack on Britain's young; and fighting terrorism will be a theme, overt or underlying, of what we see and hear between now and polling day.

The broadcasters have covered the events comprehensively yet sensitively. But they are aware that we're in an election campaign too; and when other news drives aside the carefully-balanced campaign formats, ministerial appearances give them a dilemma.

The fact is that what the Prime Minister and Home Secretary are doing in response to Manchester is newsworthy. It was Theresa May's duty to implement the recommendations of her security advisers on the elevation of the terror alert, and it would have been unthinkable for the news channels not to broadcast her various statements.

But it is also true that, if the bomb hadn't been detonated, Tuesday would have been a day in which the PM would have been under relentless damaging scrutiny for her u-turn on social care. All the opposition parties would have been in full cry across the airwaves. Yet in the tragic circumstances we found ourselves, nobody could argue that Downing Street appearances on the terror attack should prompt equal airtime for everyone from Labour to Plaid Cymru.

There are precedents for ministers needing to step out of their party roles during a campaign, and not be counted against the stopwatch balance of coverage. Irish terrorism was a factor in previous elections and the PM or Northern Ireland secretary were able to speak on behalf of the UK government. It applied to the foot and mouth epidemic that was occupying ministers' time in 2001. Prime ministers have gone to foreign meetings before, too. Mrs Thatcher went to an economic summit in photogenic Venice with her soulmate Ronald Reagan three days before the 1987 election, to the irritation of Neil Kinnock.

There are plenty of critics who will be vigilant about any quest for party advantage in the way that Theresa May and Amber Rudd now make their TV and radio appearances; and it’s inevitable that a party arguing that it offers strength and stability will not object to being judged against these criteria in extreme and distressing times.

So it's necessary for both broadcasters and politicians to be careful, and there are some fine judgements to be made. For instance, it was completely justifiable to interview Amber Rudd about the latest information from Manchester and her annoyance with American intelligence leaks. I was less comfortable with her being asked in the same interview about the Prevent strategy, and with her response that actions would follow "after June", which edges into party territory and would be a legitimate area to seek an opposition response.

When the campaigning resumes, these challenges become even greater. Deciding when the Prime Minister is speaking for the government and nation, or when she is leader of the Conservative Party, will never be black and white. But I would expect to see the broadcast bulletins trying to draw clearer lines about what is a political report and what is the latest from Manchester or from G7. They must also resist any efforts to time ministerial pronouncements with what's convenient for the party strategists' campaign grid.

There might also usefully be more effort to report straight what the parties are saying in the final days, with less spin and tactical analysis from the correspondents. The narrative of this election has been changed by tragedy, and the best response is to let the politicians and the public engage as directly as possible in deciding what direction the nation should now take.

Roger Mosey is the Master of Selwyn College, Cambridge. He was formerly editorial director and the director of London 2012 at the BBC.

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