Portuguese Prime Minister António Costa strongly criticised the future fiscal capacity for the euro area as elaborated by the Eurogroup on Friday 13 December at the Euro Summit.
A budgetary instrument for convergence whose first beneficiary countries will be the five largest economies in the euro area is not a convergence instrument and must be reworked, Mr Costa said.
This Portuguese position contrasts with the report on the Eurogroup's work on the euro area's fiscal capacity that its president and current Portuguese Finance Minister, Mário Centeno, gave to EU leaders (see EUROPE 12346/2).
According to several observers, this unexpected exit is a way for the Portuguese authorities to link euro area reform to the negotiations on the 2021-2027 Multiannual Financial Framework (MFF). Portugal is very dissatisfied with the cuts in the post-2020 cohesion policy budget advocated by the Finnish Presidency of the Council of the EU (see EUROPE 12389/2, 12387/1).
"It wants more money for cohesion", said a European source.
Other Member States, particularly in the Mediterranean, agree with Portugal, but not necessarily for the same reasons.
"Italy is not satisfied", said Italian Prime Minister Giuseppe Conte. Above all, his Government regretted the fact that the euro area budget, which would be operational at the beginning of 2021, had been designed to promote the competitiveness and convergence of the euro area countries, without providing for a stabilisation function in the event of a macroeconomic shock.
France is on the same line. “We are making progress” on the deepening of Economic and Monetary Union (EMU) with the establishment of a strengthened European Stability Mechanism (ESM) and a first “budget for the euro area that was impossible just a few months ago”, said the French President.
And Emmanuel Macron added: "We must either decide in the coming months that this budget is of sufficient size within our financial perspectives or allow it to have external resources, but we cannot remain in today’s agreed situation".
In October, the Eurogroup had agreed on the key for the distribution of the future euro area budget, which would include around €17 billion from the 2012-2027 MFF, as well as the modalities for national co-financing mobilised in parallel with European financial assistance. But the countries of the North had opposed the willingness of countries such as France to develop an intergovernmental agreement that would mobilise more national resources to increase the size of the fiscal capacity for the euro area.
In their conclusions adopted on Friday, EU leaders called on the Eurogroup to make its contribution "quickly" to the financing of the euro area, so that it can be finalised "in the context of the next MFF".
On the deepening of the EMU in general, Spanish Prime Minister Pedro Sánchez expressed Spain's "frustration" with the slow progress in reforming the permanent bailout fund for the euro area, completing the banking union and setting up the budget for the euro area.
"We want to strengthen the EMU in times of growth", he said, because it is easier than in times of crisis.
Under strong domestic pressure, Mr Conte considered that Italy's position on the reform of the ESM had been heard, since the conclusions of the Euro Summit called on Finance Ministers to "continue the work". “After a long debate, the other Member States shared our position”, said the Italian Prime Minister. And to consider the three components of the reform as a "package" of measures to be the subject of a global agreement.
Mr Macron also called for more strategic debates by EU leaders on the euro area. "We are the economic power that invests the least in these key priorities, that makes the least use of the low interest rate environment, when I compare ourselves to the United States or China," he said, deploring the fact that European savings are largely used to finance investment in the United States.
See the declaration adopted by the Euro Summit: http://bit.ly/2EgPsHr (Original version in French by Mathieu Bion and the editorial staff)