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Comment: Criticism of Hungary is typical of EU’s hubris

George Kerevan. Picture: Ian Rutherford

George Kerevan. Picture: Ian Rutherford

  • by GEORGE KEREVAN
 

THIS week I had the opportunity to interview Janos Csak, Hungary’s jovial British ambassador and an entrepreneur who is tipped as his country’s next economics minister.

Hungary is the European Commission’s current whipping boy. In obedience to the Bundesbank’s diktat to impose universal austerity, Brussels has taken Budapest to task for pressuring the Hungarian central bank into adopting a looser monetary policy.

The Hungarians – in diplomatic language – have told Brussels to get stuffed, and quite right too. Hungary is an 
export success story and has wrestled its annual deficit to below 3 per cent.

But there’s no pleasing Brussels or the Bundesbank. Which makes it all the more surprising that David Cameron has managed (seemingly) to force the European Commission to back down on its anything but austere EU budget proposals for 2014-20.

Of course, if you read the small print, the French have been bought off by protecting agricultural subsidies. The major cuts are in precisely the funding categories that would aid economic growth in beleaguered southern Europe: £22 billion off cash to promote ‘“competitiveness” and £10bn off infrastructure investment. It remains to be seen if the high-spending European Parliament, which has to ratify the proposals, will play ball. Moves are afoot by MEPs to call for a secret ballot on the budget next week.

This manoeuvre is aimed at stopping member governments pressuring MEPs into rubber-stamping the cuts. There’s more to this game than meets the eye. The MEPs, led by Martin Schulz of the socialist group and Joseph Daul of the centre-right European People’s Party, don’t want to veto the budget outright.

They know that, regardless of the theoretical cap on EU payment ceilings Cameron claims to have secured, the Commission and the European Parliament will go on making spending commitments.

Instead, the MEPs are angling for “flexibility” on an annual basis. That way they can roll forward an accumulating deficit till 2020, when Cameron and perhaps the UK are long gone. Paradoxically, that blow against British and Bundesbank austerity might boost the European economy.

Apple in a quandary over spare cash

More fun at Apple as activist shareholder David Einhorn threatens to sue the company, whose shares continue to slide after Christmas sales of its iPhone failed to meet expectations.

Einhorn’s hubris may have been prompted by a less than spectacular performance of his own hedge fund, hit by the 35 per cent fall in Apple’s stock market value since September.

Einhorn’s court case revolves around arcane aspects of proposed changes to Apple’s constitution. But his real interest lies in embarrassing Apple publicly over its gargantuan cash pile of £87bn.

Ever since it nearly went broke in the mid 1990s, the firm has hoarded ridiculous amounts of cash, most of it outside America for tax purposes. Shareholders were mollified by rising stock values – but no longer. Apple has already introduced quarterly dividends and a share buyback scheme but Einhorn wants more. The danger is that Apple may be tempted into squandering its cash on unwise acquisitions, or on new products that are not ready for the market.

Of course, if they really want to get up Einhorn’s nose, Apple’s management can always follow the example of Dell computers and use their spare dosh for a buyout.

 

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