Eurozone ministers fret over cool-down in economy

BUCHAREST: Eurozone finance ministers said darkening clouds in Germany and Italy posed a danger to the European economy as France pushed for a common budget to buck the tide.

The Eurozone economy is struggling, with export powerhouse Germany suffering from the slowdown in China and rising protectionism sparked by the United States.

Italy meanwhile has been in recession since the second half of last year, caught under a mountain of public debt, fragile banks and diving investor confidence.

France has also seen growth slow as “yellow vest” protesters disrupted business.

“We are concerned about the situation in Germany, we are concerned by the recession in Italy,” French Finance Minister Bruno Le Maire said on the sidelines of a meeting of Eurozone and EU finance ministers in Bucharest.

“I think that the current economic situation clearly proves that there is a need now for decisions,” he said.

At the heart of France’s thinking is the idea of a Eurozone budget that would deliver fresh financial firepower to the 19 countries using Europe’s single currency.

But ministers have struggled for months with the idea, first introduced by French President Emmanuel Macron. Northern European countries, spurred on by the Netherlands, have been reluctant to sign on.

Discussions begun in 2017 have produced little, with ministers stuck in disagreements over the size of the budget, how it will be financed and the conditions for payouts.

Divisions are so great that ministers officially refer to the proposal not as a budget, but as a something called an instrument in order to not ruffle feathers.

“We are making useful progress in this discussion, which is not simple either from a political or technical point of view,” said EU Economics Affairs Commissioner Pierre Moscovici after talks with ministers in Bucharest.

The ministers, who meet every month, have agreed to strike a compromise on the proposal in time for an EU leader’s summit in June.

But any sense of urgency was not shared by the Dutch. “I’m not in a hurry at all,” said Finance Minister Wopke Hoekstra.

The Netherlands has “clear conditions … If we can make it work all the better. If it doesn’t, it is unlikely that we would take part,” he said.

The EU’s new economic forecasts come out on May 7 and few expect a turnaround from the gloominess.

IMF Managing Director Christine Lagarde last week warned that the Eurozone was “not resilient enough” to withstand another crisis.