Monday

16th May 2022

Spanish commissioner lashes out at core eurozone states

  • Commissioner Almunia has hit back at Germany and the Netherlands (Photo: ec.europa.eu)

Spain’s European commissioner has lashed out at core eurozone states in the wake of suggestions from the Netherlands and Germany that heavily indebted members of the single currency could be booted out of the club.

"There are member states, in particularly some of the most powerful - Germany, Netherlands, Finland, Austria - who feel that they don't have this kind of problem," said Joaquin Almunia, the EU executive’s competition commissioner.

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These wealthier states feel that "they don't need to make an additional effort to compensate the lack of resources of the countries who have the most difficulties to reduce imbalances," he continued, according to a report from AFP.

Since the start of the eurozone crisis, Finland, Austria, the Netherlands and Germany, all triple-A-rated states, have consistently held to a hawkish line on austerity and demands on peripheral eurozone countries who did not benefit from the creation of the single currency to the same extent as the core.

Most recently, on Wednesday, the Hague and Berlin mooted the idea that if countries do not adhere to strict budget discipline, they could in extreme cases be expelled from the euro.

"Those who think that this hypothesis is possible just do not understand our process of integration," Almunia added, speaking in New York.

"European integration is the only option."

Greece on Thursday was also quick to respond to the bellicose language coming from the Netherlands and Germany, insisting that the country will not leave the euro.

“There is no threat of Greece exiting the eurozone,” government spokesman Ilias Mossialos said, according to local reports. “We are proceeding with reforms quickly.”

Separately, France on Thursday evening approved the second bail-out package for Greece and measures strengthening the eurozone’s rescue fund.

The bill approving an agreement reached between European premiers and presidents on 21 July this year won support from the governing right-wing UMP of President Nicolas Sarkozy while the opposition Socialists abstained. The far left voted against the measures.

Also on Thursday, Germany’s Bundestag initiated its debate on the strengthening of the eurozone rescue fund, the European Financial Stability Fund. Berlin is expected to vote on the wider package of measures on 29 September.

Meanwhile, the European Central Bank announced it was to keep interest rates unchanged at 1.5 percent as a result of what the bank’s president, Jean-Claude Trichet, described as "particularly high uncertainty and intensified downside risks" to the European economy.

His words were also echoed on Thursday in a gloomy warning from the OECD that declared the world to be on the brink of a second recession and that the eurozone crisis was in danger of worsening.

"Growth is turning out to be much slower than we thought three months ago and the risk of hitting patches of negative growth going forward has gone up," said OECD chief Economist Pier Carlo Padoan.

The eurozone will see 1.4 percent growth in the third quarter before dropping to just 0.4 percent in the final stretch of the year.

The zone’s main economic engine, Germany, will see growth of 2.6 percent in the third quarter, according to the OECD, before sliding to 1.4 percent in the fourth quarter.

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