Meeting in an enlarged format, euro area finance ministers should be able to agree, “in the first half of next year”, on a work plan to complete the euro area Banking Union, according to the Eurogroup President, Paschal Donohoe, in his letter dated Friday 10 December to the leaders of the euro area countries, who will meet on the sidelines of the EU summit on Thursday 16 December.
“My aim and determination is to reach an agreement on a work plan in the first half of next year. During the next 6 months, we have a unique window of opportunity to deliver on the Euro Summit mandate”, writes the Irish Finance Minister, for whom, at their informal dinner on Monday 6 December, his counterparts agreed to relaunch the “political” discussions.
After its failure in June (see EUROPE 12743/8), the Eurogroup did not reach an agreement, the absence of a German government preventing any political decision. The programme of the new SPD/Grünen/FDP coalition government calls for progress on the Banking Union, including the creation of a European Deposit Insurance Scheme (EDIS) and further work to reduce financial risks.
And French Finance Minister Bruno Le Maire, whose country will take over the EU Council Presidency in the first half of 2022, said on Friday that he was determined to take this issue to the next level.
A faster than expected economic recovery. The president of the Eurogroup notes that the euro area economy has recovered “faster than expected and far faster than from the financial crisis”.
Thus, despite a macroeconomic shock due to the Covid-19 pandemic that was deeper than in 2008, it took only 2 years for the Eurozone to recover its pre-pandemic GDP level, compared to 7 years during the financial crisis.
Mr Donohoe reiterated the position of the euro area countries that the aggregate fiscal stance at the Eurozone level should remain “moderately supportive” in 2022 (see EUROPE 12847/5), when the rules of the Stability and Growth Pact will remain frozen. This will allow them to continue to support the sectors still affected by the pandemic and to maintain a sustained level of public investment facilitated by the implementation of the Next Generation EU Recovery Plan, while restoring medium-term sustainability of their public finances.
Stability and Growth Pact. While the Commission has re-launched the debate on a reform of the European economic governance framework (see EUROPE 12829/3), the president of the Eurogroup plans to organise a series of discussions at ministerial level to find the right way to combine sustainable public finances, meeting the investment needs of the green and digital transitions, identifying ways to streamline and simplify the framework, and strengthening compliance and ownership at the national level.
See Mr Donohoe’s letter: https://bit.ly/3F3zhL6 (Original version in French by Mathieu Bion)