Mandated at the end of 2020 by the Euro Summit (see EUROPE 12621/3), the Eurogroup has not achieved the objective of adopting - in the first half of 2021 - a comprehensive and ambitious work programme aimed at completing the banking union in the euro area, in particular by setting up a European Deposit Insurance Scheme (EDIS).
This observation, made last week at the meeting of euro area finance ministers (see EUROPE 12743/8), is due, inter alia, to the proximity of the German parliamentary elections, which limit decision-making by the euro area’s largest economy.
In his letter to the Euro Summit on Friday 25 June, Eurogroup President Paschal Donohoe acknowledges the lack of consensus on a work programme that is “sufficiently ambitious and provides a clear direction for the work in the coming years”, with the current mandate of the European institutions set for 2024.
He promises to work on all aspects of the banking union - EDIS, regulatory treatment of sovereign risk, reduction of non-performing bank loans, balance between home/host supervisors- in order to reach a roadmap “by the end of the year”.
See Mr Donohoe’s letter: https://bit.ly/3vM4VYh
Risk of an uneven economic recovery
The president of the Eurogroup also spoke of a “very real” risk of an uneven recovery between countries and sectors affected by the Covid-19 pandemic and of a widening of social inequalities, although growth forecasts for the euro area have been revised upwards.
At the aggregate level, “our economy is on track to recover strongly” and the euro area could return to pre-pandemic levels “in early 2022, earlier than previously expected”, Donohoe said.
In view of the uncertainties linked to the evolution of the pandemic, the 19 euro area countries stress the need to avoid any premature withdrawal of public support for the economy, including the contribution of the Next Generation EU Recovery Plan, even if aid should be more targeted and temporary.
On this point, the European Council will ask the European Commission and the Council of the EU on Thursday 24 June to assess “expeditiously” the recovery plans that 24 Member States have formally submitted at this stage. Half of them should be approved by the Ecofin Council on Tuesday 13 July (see EUROPE 12744/5).
See the draft conclusions of the EU summit: https://bit.ly/2SKJjOn (Original version in French by Mathieu Bion)