EU finance chiefs thrash out post-Brexit future

From left to right: Thomas Wieser, President of the Economic and Financial Committee; Jeroen Dijsselbloem, President of the Eurogroup; Carsten Pillath, Director General for Economic Affairs and Competitiveness. [Council]

European Union finance ministers wrangled yesterday (6 November) over differences in plans to reform the euro common currency in the wake of last year’s shock Brexit vote.

The ministers were laying the groundwork for a leaders’ summit on 15 December that will discuss proposals by French President Emmanuel Macron and European Commission chief Jean-Claude Juncker.

German coalition talks reject Macron’s eurozone budget plan

German parties exploring a coalition government have dealt an early blow to French President Emmanuel Macron’s hopes for more expansive fiscal policies from Berlin, backing a balanced budget and rejecting the idea of a separate pot of cash for the eurozone.

The 27 EU ministers – minus Britain – discussed three key issues that go to the heart of making the euro more politically and economically unified, so it is more resilient against future crises.

They zeroed in on creating a eurozone rainy day fund, simplifying the EU’s budgetary discipline rules and finally completing a “banking union” that removes restrictions between lenders across the bloc.

“We will try to boil it down so that we can report to the European leaders in December,” said Jeroen Dijsselbloem, who heads the Eurogroup of 19 countries that use the single currency, after the discussion.

But Britain was left out in the cold as it is set to leave the EU in 2019 before most of the planned reforms will take effect.

Britain frozen out as EU finance chiefs plot future

European Union finance ministers meet without Britain in Brussels on Monday (6 November) to try to iron out their differences on plans to reform the euro in the wake of the shock Brexit vote.

Annual budget?

One of the most complex challenges will be simplifying rules for national budgets, which eurozone governments have to keep under tight control to escape sanctions from Brussels.

But if the Europeans agree on the need for reform, they are divided on how to achieve it with France traditionally taking a more easy-going line than Germany, which cherishes a balanced budget.

“Debt will become more and more the issue,” said Dijsselbloem, with public debt levels in several countries more than double the EU limit.

The question of the eurozone building common spending power, an old idea recently dusted off again by Macron, is also complicated.

Paris wants a big budget as a show of European solidarity in the face of financial shocks, whereas Juncker wants to make it small and symbolic – a line favoured by the Germans.

“We don’t need an annual budget for that,” said Juncker-ally Klaus Regling, the head of the European Stability Mechanism, the eurozone’s current rescue fund, though he said a debate was still needed.

Banking union and a system of deposit guarantees to prevent bank runs will also be on the agenda, with the EU keen to finally finish plans that have been on the drawing board since the eurozone debt crisis started.

One further issue not discussed was the next head of the Eurogroup, to replace Dijsselbloem, who steps down in January.

There is no official candidate but rumoured frontrunners include Portugal’s Mario Centeno, Luxembourg’s Pierre Gramegna and Slovakia’s Peter Kažimír, the only one so far to publically announce his intention.

A formal decision will be made on 4 December.

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Acting Dutch finance minister, Jeroen Dijssselbloem will continue as Eurogroup President until the end of his mandate in January, various eurozone officials told, quashing speculation that he would step down earlier following an election rout at home.

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