Ireland’s Paschal Donohoe has been elected as the new Eurogroup President, replacing Portugal’s Mario Centeno. He beat out Spanish minister Nadia Calviño, who had the favourable support of the countries accounting for 80% of the Eurozone’s GDP, including Germany, France and Italy.
Intermoney | As the pandemic has eased in Europe, long-standing problems have returned to the forefront, one of which is the ever-present Brexit. According to the FT, there is greater willingness to bring positions closer together, so that there would be a breakthrough in the negotiations from 29 June, However, the conflictive issues remain and include: the UK’s demand to hold on to the access to its fishing waters, the disagreements over how to create a regulatory playing field to protect companies from unfair competition. There is also Brussels’ desire to wrap up all the parts of a future relationship into a single legal agreement.
We approach at the European Council on Friday with two distinct groups of countries clearly expressing concerns about the Commission’s proposal. Some because they do not welcome any attempt to share risks, while others believe the programme benefits nations they consider to be rich. These are the axis of the frugals (Netherlands, Austria, Denmark and Sweden) and the Visegrads (Hungary, Poland, Czech Republic and Slovakia). These would be joined by Finland and Estonia, which have also shown their discomfort with the proposal.
Mario Centeno is leaving his post as Portugal’s finance minister, opening the door for a new leader of the Eurogroup. Spanish Economy Minister, Nadia Calviño, is one of the favourites to replace the Centeno, along with the Finance Ministers of Luxembourg, Pierre Gramegna and Ireland, Paschal Donohoe.
An important day in Europe today. The European Commission will present its proposal for a post-coronavirus economic recovery plan. Ursula Von de Leyen will seek to find a compromise between the demands of the countries most affected by the pandemic and those of the so-called frugal countries. Instead of countries putting more money from their national coffers into the European Budget, the EC plans to finance itself with new “green” taxes that could raise annual revenues of €5-14 Bn for the EU.
Intermoney | In the name of the ECB independence, Christine Lagarde, made it clear that the only guide for the institution is the fulfilment of its mandate and no resources or efforts will be spared in this task. Once the central bank has made it clear that it does not accept the authority of the German courts, it must move on towards a more political phase in which it can build bridges and provide a solution to the problem. If it does not do so within three months, the Bundesbank could find itself in a difficult legal mess.
Asad Zangana (Schroeders) | Many economies are facing a deep recession as a result of Covid-19, but Italy went into this crisis in a more precarious situation than most. The country stands out as the most likely candidate to exit the eurozone for several reasons. First, with gross debt estimated at 135% of GDP in 2019, it faces a significant challenge in both servicing its debt, but also refinancing it.
Oliver Vardakoulias via Macropolis |On March 26th, the European Council issued a joint statement stressing the objective of a ‘green transition. Since then a number of governments, business leaders, academics, MEPs, supra-national organizations, investors, and NGOs have equally called for post-emergency recovery packages (fiscal and monetary expansion to prop up our economies) to be aligned with the vision and targets of the EU Green Deal.
As expected, European Union leaders yesterday approved the 540 billion euro package agreed by the Eurogroup last week (focused on providing the most urgent liquidity). But there was no progress on the long-awaited European Recovery Fund. As usual, details such as its amount or the distribution of the economic burden, between non-repayable transfers and loans, have yet to be specified. The Fund, which is expected to reach over EUR 1 trillion, is not expected to start operations until 2021.
J.P. Marín Arrese | The EU strategy for curbing the crisis stalled on Wednesday’s early hours as Holland and Italy bitterly clashed over the scope and conditions of the plans to support ailing partners. Minister Gualtieri rejected anything short of mutually guaranteed bond emissions. His Dutch counterpart flatly refused to envisage such a way out while insisting on demanding structural reforms from any beneficiary of the rescue fund. This row rests on wholly misleading assumptions.