Friday

14th May 2021

Luxembourg leader set to extend euro zone reign

  • Mr Juncker has served as Eurogroup chairman for five years (Photo: European Commission)

Luxembourg's Prime Minister, Jean-Claude Juncker, looks set to receive a fresh mandate under Lisbon Treaty rules as head of the 16-nation group that shares the euro currency.

"We all agreed that in January the Eurogroup president (chairman) will be elected for two and a half years," Mr Juncker told a news conference after a meeting of euro area finance ministers on Tuesday (1 December).

Read and decide

Join EUobserver today

Become an expert on Europe

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

... or subscribe as a group

The Lisbon Treaty – a new EU rulebook that started on 1 December - brings about a number of institutional changes, including the extension of the Eurogroup chairman's working mandate from 2 to 2.5 years.

Mr Juncker's current term is due to expire at the end of 2010, but he now has strong backing from member states to stand for re-election in January.

"He is today the only candidate," French economy minister Christine Lagarde told journalists after the meeting.

The Luxembourg politician has already served as Eurogroup chairman for five years, with Italy expressing an interest in the post earlier this year having failed to secure the European parliament presidency position.

"I see that position would fit our finance minister Giulio Tremonti," Italian Prime Minister Silvio Berlusconi told journalists at the end of a EU summit in June.

Euro too strong

As well as the institutional housekeeping decision, ministers discussed the strength of the euro currency, with all agreeing it was over-valued. The IMF's Europe director, Marek Belka, also attended the meeting and cautioned over the euro's strength.

Mr Juncker briefed ministers on his recent visit to China with EU economy commissioner Joaquin Almunia and European Central Bank chief Jean-Claude Trichet.

"We see it as abnormal that a fast-growing economy devalues its currency in relation to a currency zone where growth performance is far less positive," he said, pointing to China's eight percent GDP annual growth rate.

Euro area growth is forecast to be positive but below one percent next year, with politicians and business leaders concerned the euro's strength versus other currencies is harming the region's export competitiveness.

However Mr Juncker was not overly optimistic about the outcome of his recent visit.

"We came back from China, not exactly reassured but at least we got out message across," he said.

Greece

The ministers also discussed the poor state of Greek public finances, with Mr Almunia citing the need to keep up pressure on the new Socialist government to bring down deficit levels, forecast to exceed 12 percent of GDP this year.

"The problems in Greece are problems of the euro area," he said. The country's debt total is expected to reach 124 percent of its GDP next year, the highest in the euro area.

This has raised the cost of borrowing money on the markets for the Greek government, with investors increasingly concerned about a possible default.

However Mr Juncker moved to quell rumours of a possible bankruptcy, and expressed confidence in the new administration's ability to tackle the challenges. "There is no hint of bankruptcy as far as Greece is concerned," he said.

The Greek government recently announced its budget for 2010 that aims to bring the deficit down to 9.1 percent for that year.

Mr Juncker welcomed the initiative but said other reforms should to be implemented, and did not rule out the need for a supplementary budget later next year.

Luxembourg tax scandal may prompt EU action

An investigation into Luxembourg's tax regime has uncovered how the Italian mafia, the Russian underworld, and billionaires attempt to stash away their wealth. The European Commission has put itself on standby amid suggestions changes to EU law may be needed.

Investigation

Portugal vs Germany clash on EU corporate tax avoidance

Portugal's taking over the EU presidency puts the tax transparency law for corporations - which has been fought over for years - to a vote in the Council of Ministers. The resistance of the German government has failed.

News in Brief

  1. No EUobserver newsletter on Friday 14 May
  2. Germany stops Facebook gathering WhatsApp data
  3. Italy rebuts reports of EU deal with Libya
  4. MEPs demand EU states protect women's reproductive rights
  5. At least nine dead in Russia school shooting
  6. Bulgaria interim government appointed until July election
  7. German priests defy pope to bless same-sex couples
  8. New EU public prosecutor faults Slovenia

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  2. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed
  3. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  4. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  5. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  6. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance

Latest News

  1. EU aims at 'zero pollution' in air, water and soil by 2050
  2. French police arrest Luxembourg former top spy
  3. Vaccine drives spur better-than-expected EU economic recovery
  4. Slovenia causing headaches for new EU anti-graft office
  5. 'No place to hide' in Gaza, as fighting escalates
  6. EU chases 90m AstraZeneca vaccines in fresh legal battle
  7. Fidesz MEP oversees FOI appeals on disgraced Fidesz MEP
  8. Belgium outlines summer Covid relaxation plans

Join EUobserver

Support quality EU news

Join us