Germany is to warn Britain that it will seek to cancel next month’s European budget summit if British PM David Cameron insists that he will veto any deal other than a total freeze on spending. German Chancellor Merkel is trying to persuade Cameron to back a cap on EU spending at 1 per cent of European GDP. The European Commission has proposed a figure of more than €1tn for the years 2014 to 2020, or nearly 1.1 per cent of European GDP.

Cover

Merkel to warn UK on Europe budget veto – Financial Times

Taoiseach Enda Kenny and German chancellor Angela Merkel "agreed" that the “unique circumstances” of Ireland’s economic crisis require a special approach. Dublin has long campaigned to have its €64 billion bank bailout debt burden borne in part by the European Stability Mechanism (ESM). The German Chancellor seemed to ruled this out during last week’s European Council.

Cover

Merkel and Kenny agree that Ireland needs special approach – The Irish Times

Two litmus test regional elections took place this weekend in Spain. In Galicia, PM Mariano Rajoy's Popular Party (PP) retained its absolute majority. In the Basque Country, the Basque Nationalist Party (PNV) won a majority of seats while the secessionist coalition EH-Bildu became the second political force in the region. "Socialism is still in free fall," the paper notes, commenting on the very poor results for the Socialist Party (PSOE).

Cover

Galicia: breathing space for Rajoy – Basque Country: Sovereignty lurch – El Periódico de Catalunya

The second round of the Czech Republic's Senate elections was less favorable for the Communist Party than the first round of regional elections held a week earlier, notes with relief the Prague daily. It won only two seats. The Social Democrats, however, obtained 46 seats out of 81 seats, another setback for the Czech Republic's conservative government which is shaken by corruption scandals and still with two years in office to run.

Cover

Against the Communists – Mladá Fronta DNES

According to a report by the authority in charge of Sweden's electricity network, only one of the country's three nuclear power plants is fit to be enlarged in order to increase production capacity. This poses a problem for the government because the law prohibits the construction of new plants.

Not up to scratch – Dagens Nyheter

Iceland has voted in favour of a new Constitution written by a Constitutional Council of 25 citizens. In a non-binding referendum this weekend the Yes took 66.3%. Turnout was 48.9%. Six questions on the proposed new constitution were asked, including the nationalisation of natural resources that do not belong to individuals and the establishment of a state church. A committee of lawyers will advise on the new draft constitution within two weeks.

Cover

First reading of Constitution completed by Christmas – Fréttablaðið

The Berlin daily reveals that Russians are to be tried for espionage for the first time since German reunification in 1990. Arrested in October 2011, the couple lived in Germany for 25 years on Austrian passports. They are accused of having procured NATO and the EU documents for Moscow. Berlin initially wished for a swap with its Western agents, but the German Attorney General began legal proceedings.

Cover

Germany’s largest espionage case – Die Welt