Italy’s current economic situation has done little to calm fears in the Eurozone as one of the EU’s leading nations has found itself mired in a deep recession in recent months.
Amongst this backdrop, the 19 ministers of the Eurozone met in the Romanian capital Bucharest late last week to discuss the situation in Italy as well as a decision to authorise the disbursement of €1 billion to Greece after the European Commission’s recent update to its second enhanced surveillance report from February which underlined the pending deliverables on behalf of the Greek government according to its commitments of the Eurogroup that were to be implemented by the end of 2018.
While in Bucharest, the Eurogroup finance ministers opted to leave all EU budget decisions for the group’s next meeting, which is set to take place after the European elections in May.
Italy’s “delicate situation”
EU Monetary Affairs Commissioner Pierre Moscovici said ahead of a meeting of Eurozone finance ministers that his greatest concern was what he called Italy’s “delicate situation” He said that the EU executive forecast will be finalised “in the weeks to come” and that the numbers could show that the Italian economy could reduce to between 0.3% to 0.4% for 2019, signalling a foreboding shadow over the Italian economy.
“We will see the forecasts of 2019 and afterwards, after the European Elections we will see what we will have as decisions we will take with the Italian government,” said Moscovici, who added that the economic condition in Italy is highly sensitive and requires careful monitoring
Greece to receive a green light
The most recent update of the surveillance report, just two days ahead of the Bucharest Eurogroup meeting, confirmed that Greece has taken the necessary actions to carry out the EU’s specific reform commitments. Moscovici added that he believes the decision was taken “in full cooperation” with the rest of the institutions, including the European Central Bank and the European Stability Mechanism.
Scholz – Le Maire aligned on need of EU-19 to decide on eurozone budget
France’s Finance Minister Bruno Le Maire was quite vocal in Bucharest, saying that the sharp slowdown in Germany and Italy’s ongoing recession could act as facilitators for the immediate reform of the Eurozone’s monetary union.
“This current economic situation proves there is time for strong decisions. Everything is on the table, now it is time to decide which is the right tool to put more innovation in the Eurozone,” he added. “That’s why I will ask strongly today to take these decisions as soon as possible,” said Le Maire before adding, “There is a concern for the future of the Eurozone if we are not able to reduce the current divergence,” which Le Maire said would leave the Eurozone in danger of falling further alongside its economies if the issue is not resolved.
According to German Federal Finance Minister Olaf Scholz, the members of the Eurozone need to decide on the use of funds in the group’s planned budget. “We know that in addition to the opportunities that we have through the common policy and activity of the central bank, we also need independent opportunities to influence the economic development of Europe – within the framework of the euro,” adding, “We imagine that this will take place in the context of the EU, connected with the budget, but that there is a separate governance.”
In December, the European Council tasked the EU’s finance ministers with preparing a budget for the 19 common currency countries. According to the Council’s instructions, the draft budget should serve to strengthen the competitiveness and harmonisation of the economic conditions and should be located within the entire EU budget.
The current speculation is that those EU countries who wish to join the euro in the foreseeable future could voluntarily participate in the budget. So far, however, there has been no consensus among the 28 current members of the European Union about who should decide on the allocation of funds.