Germany will back Spanish Economy Minister Luis de Guindos as the next head of the Eurogroup of eurozone finance ministers, replacing the Dutch finance minister, Jeroen Dijsselbloem, Chancellor Angela Merkel said on Monday (25 August).
Merkel’s support for de Guindos came before talks this Saturday among EU leaders, who are expected to discuss nominations for several top European Commission posts among other issues. Dijsselbloem’s term does not end until mid-2015, but his replacement may come up this weekend.
Merkel gave her support at a joint news conference with Spanish Prime Minister Mariano Rajoy in the northern Spanish city of Santiago de Compostela, at the end of a two-day visit. Her backing could prove decisive due to Germany’s considerable influence.
“Luis de Guindos has been an excellent economy minister in difficult times,” Merkel said, adding Germany would back his candidacy once the term of the current president was up.
De Guindos has served as Economy Minister in the centre-right government of Rajoy since it took power in 2012 – the year Spain found itself at the heart of a growing eurozone crisis.
He had to steer through deep spending cuts as Spain tried to rein in its gaping deficit. He also oversaw a €41.3 billion European bailout of the country’s ailing banks, most notably Bankia.
Bankia is a conglomorate made up of seven failed regional savings banks. On 25 May 2012, Bankia requested a bailout of €19 billion, the largest bank bailout in Spain’s history. Bankia was partly nationalised in the bailout, with the government taking a 61.5% stake.
It sold off a 7.5% stake in February, beginning a privatisation process that, for some, has come to symbolise Spain’s gradual economic recovery. De Guindos has overseen this improvement.
The Eurogroup is the meeting of the eurozone’s finance ministers, which is held in secret before the meeting of EU finance ministers. It is a policy coordinated for euro area nations and is an influential voice in matters such as the Growth and Stability Pact and the reduced scale Financial Transaction Tax, which Spain supports.
At the conference, German Chancellor Angela Merkel said the crisis in Ukraine was taking its toll on Germany, Europe’s largest economy, which suffered a surprise 0.2% contraction in the second quarter.
Merkel said an unusually mild winter, which brought forward the usual spring upturn, had played a role in the weak April-June reading but added that the Ukraine crisis was also hitting German growth.
“There are, however, some uncertainties – I don’t want to conceal that – the whole Ukraine-Russia situation shows that we of course have a big interest in our international relations being constructive again,” she said.
“But I nonetheless expect that our overall annual growth rate will be good, if nothing dramatic happens.”
The German government has forecast that the economy will grow by 1.8% this year.