Tuesday

28th Jan 2020

Monti ups the stakes ahead of EU summit

  • Italy's technocrat leader Mario Monti predicts soaring interests rates if EU summit fails to deliver (Photo: ec.europa.eu)

Italy’s technocratic leader Mario Monti is warning of dramatic consequences should leaders at next week’s EU summit fail to find concrete solutions to save the euro and prevent contagion.

He told reporters in Rome on Thursday (21 June) that the doomsday scenario at the EU summit would invariably lead to higher borrowing costs on all EU countries.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or join as a group

“There would be progressively greater speculative attacks on individual countries, with harassment of the weaker countries,” he said.

An EU summit stalemate would risk turning Italians even more against the EU, he noted, with his government pushing through unpopular labour reforms, tax hikes and pension cuts.

Monti is also calling for a fuller banking union, a European deposit guarantee, and “new market-friendly policy mechanisms” to help struggling countries.

The mechanism would apply to countries who “respect the rules on public finance and structural reforms”. Monti did not disclose the full details of his plan but said he favours the purchase of bonds of countries under attack, reports the Guardian.

Italy, whose borrowing costs are soaring, had earlier floated the idea of using the €440bn eurozone bailout fund to buy bonds on the market. German Chancellor Angela Merkel had however quickly shot down the idea.

“There must be something wrong if a country that complies still has such high interest rates,” Monti told the Guardian.

Meanwhile, Italy’s ten-year bonds hit six percent and are rising. Analysts predict Italy’s weak exports may also stifle any kind of significant growth for at least another year. The country is also burdened by €2 trillion in public debt.

Monti is hoping to secure a preliminary deal with German Chancellor Angela Merkel, French president Francois Hollande, and Spain's prime minister Mariano Rajoy. All three are meeting him in Rome on Friday evening (22 June) to figure out how to achieve a fiscal and banking union in the euro zone.

Spain, reports Reuters, may also use the occasion to formally request for a €100 billion following revelations on Thursday that its banking sector needs €62 billion in extra capital.

Over a dozen European banks have also been hit by another downgrade by credit rating agency Moodys. Some 15 banks and financial institutions, including Germany’s Deutsche Bank, had their ratings cut on Thursday.

“All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities,” Moody’s global banking managing director Greg Bauer said in the agency’s statement.

Credit Suisse had its rating cut by three notches. Ratings for four of the banks were cut by one notch and another ten by two. Credit Suisse's chief financial officer, David Mathers, told Reuters that Moody’s still recognises the bank as highly rated despite the three notch drop.

The downgrades come on the heels of a Europe that is progressively sliding into a recession.

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Interview

EU Africa envoy: Europe needs to look beyond migration

Europe's obsession with migration from Africa means it risks losing out the continent's potential when it comes to trade, says the EU's ambassador to the African Union, Ranier Sabatucci. "Africa is a growing continent, it is the future," he says.

EU agrees 2020 budget deal

EU governments and the parliament agreed in marathon talks ino next year's budget - which will boost spending on climate, border protection, and the European satellite system. It will also be a benchmark if there is no long-term budget deal.

News in Brief

  1. UK approves limited role for Huawei in 5G network
  2. Cases of coronavirus in France and Germany
  3. Report: EU court seeks authority on post-Brexit deal
  4. Slovenian PM resigns, calls snap election
  5. Merkel wants EU-Balkan talks agreement by March
  6. Germany: UN sanctions to enforce Libya ceasefire
  7. Irish PM: UK weaker than EU in trade talks
  8. Report warns of challenges under new EU telecom rules

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Latest News

  1. 'Brexit is not going to go away,' warns EU's Barnier
  2. Belgian spy services launch internal clear-up
  3. US and UK in war of words over Huwaei
  4. How Slovakia's far-right might pull off an election victory
  5. Trump's 'plan' for Israel will go against EU values
  6. Salvini down, but not out in Italy regional poll
  7. Brexit finally happens - the UK leaves the EU This WEEK
  8. Why is Netherlands so far behind on renewables?

Stakeholders' Highlights

  1. UNESDAUNESDA appoints Nicholas Hodac as Director General
  2. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  3. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  4. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  5. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  6. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues

Join EUobserver

Support quality EU news

Join us