Mixed Signals From Finance Ministers On Chances For Eurozone Budget

BRUSSELS (Alliance News) - A French-German proposal to establish a eurozone budget marks a "very ...

Alliance News 19 November, 2018 | 4:39PM
Email Form

BRUSSELS (Alliance News) - A French-German proposal to establish a eurozone budget marks a "very important contribution" that will now need to be advanced by member states, said the president of the Eurogroup panel of eurozone finance ministers, Mario Centeno, on Monday.

Germany and France agreed on Friday on a proposal for a eurozone budget. It is meant to help lessen the differences between the 19 eurozone countries' national economies and better prevent crises.

Centeno spoke after a meeting of EU finance ministers, which discussed the budget proposal.

The proposal got a push earlier Monday from German Finance Minister Olaf Scholz, who said he hoped to use the gathering to convince his counterparts.

However, Italian Deputy Premier and Interior Minister Matteo Salvini said his country is ready to block the proposal.

"If it damages Italy, as it seems, obviously there won't be our agreement," said Salvini, as quoted by the ANSA news agency on the sidelines of an event in Milan.

Salvini, the leader of the far-right League, is leading Rome's fight against Brussels regarding Italy's spending plan for 2019. His populist government is defying the EU's calls to trim its budget, and it may incur sanctions as a penalty.

Austrian Finance Minister Hartwig Loeger also struck a more sceptical tone, saying before the start of the finance ministers' meeting that the proposal needs more "clarity." Austria holds the rotating EU presidency through December.

The new budget would be implemented from 2021 onwards, with a top line yet to be determined. It would be incorporated into the existing long-term EU budget framework, which is negotiated every seven years.

Work on the proposal began in June, when German Chancellor Angela Merkel and French President Emmanuel Macron agreed on the creation of a eurozone budget within the EU's existing financial framework.

The proposal is a high priority for Macron.

A summary statement finalized on Friday said the eurozone budget would "primarily be financed by external assigned revenues, possibly including the allocation of tax revenues." It referenced a French proposal for a new financial transfer tax as one potential idea.

The statement also said that "European resources," such as more effective ways to deliver financing, would be drawn on.

The proposal aims to address competitiveness and economic convergence on the one hand and stabilization on the other, said Centeno. He noted its present form focuses more on the former priorities - something that Germany had pushed for.

But all three elements are important for strengthening the eurozone, he added.

The European Commission has suggested a similar proposal that would address asymmetrical economic shocks by channelling investment into infrastructure or education.

That proposal sees a top line of EUR30 billion, about USD34.3 billion, but it requires that participating states are in good fiscal shape.

Monday's gathering was focused on pressing ahead with eurozone reforms, including making the banking sector more resilient through a deposit insurance scheme, ahead of a self-imposed December deadline.

By Helen Fessenden and Alvise Armellini, dpa

Copyright dpa

Email Form
About Author Alliance News

Alliance News provides Morningstar with continuously updating coverage of news affecting listed companies.