Brussels, 08/07/2016 (Agence Europe) - On Monday 11 July, eurozone finance ministers will discuss the economic and financial fallout of the uncertainty created by the prospect of the United Kingdom leaving the European Union. This will be their first meeting since the British referendum, won by supporters of the country leaving Europe (EUROPE 11580).
The British referendum is an event that had a noticeable impact on exchange rates and stock exchanges in a number of sectors and countries, said a high-ranking European official, adding that the uncertainty caused by the delay between the referendum and the start of exit negotiations between the UK and the EU27 would have an impact on short-term growth outside the UK and was likely to increase uncertainty for the weeks and months to come, which will lead top lower investment. Although the outcome of the talks by ministers was unpredictable, there was no need to consider mobilising any budget reserves, he said.
Although the prospect of Brexit has increased fears about the value of banks, particularly Italian banks, Eurogroup is not expected to discuss the matter.
Spanish and Portuguese budget situation
Eurozone ministers will consider the draft recommendation adopted by the European Commission on Thursday noting that Spain and Portugal have failed to take enough action to respect the budget trajectory for 2013-2015 agreed for them at European level (EUROPE 11589).
It will be for the ECOFIN Council on Tuesday 12 July to vote on this question, pointed out the above source, saying that the confidentiality of Eurogroup meetings was ideal for this type of discussions among ministers. If the Council endorses the draft recommendation, the timeline will be as follows. Within twenty days of this position and after the two countries have had the opportunity to make their case, the Commission will propose that the two countries be fined and Structural Fund monies stopped. It would then be for the Council to confirm the fine or reduce it.
Spain, one of the engines of growth within the eurozone, is convinced that it will not get fined, while Portugal says the prospect of fines is “unfair, counterproductive and incomprehensible.” France and Italy, whose budget situation is not ideal, are reluctant at the idea of fining Spain and Portugal, but Germany and the Netherlands recommend a nitpickingly strict application of the Stability and Growth Pact. “If I look at the figures, I really have to conclude that Spain and Portugal have done too little. There automatically has to be sanctions,” said the head of Eurogroup, Jeroen Dijsselbloem, on Thursday at the Dutch parliament, according to reports by AFP. (Original version in French by Mathieu Bion)