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26th Jun 2022

Eurozone future needs structural reforms, EU leaders told

  • France's Macron and Germany's Merkel will present a common position in March (Photo: Consilium)

EU leaders were told on Friday (15 December) that the consolidation of the eurozone comes first, and requires discipline and more reforms.

"Now is the time for structural reforms," German chancellor Angela Merkel said after the 27 heads of state and government discussed the future of the economic and monetary union (EMU) in Brussels.

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Merkel noted that "member states are right now in a very favourable position after years of crisis" and insisted on the need to "achieve an economic convergence between member states."

The president of the European Central Bank, Mario Draghi, also told leaders that they "need convergence of policies via structural reforms."

"All countries should do structural reform at home, we also need to improve the structures of the euro area," he said, according to an EU official.

The leaders agreed to task the Eurogroup, the informal group of eurozone finance ministers, with preparing a roadmap on completing the banking union, creating a European monetary fund and building a capital markets union.

The 19 eurozone leaders will review the work at a summit in March and will try to take decisions on this issues in June.

"Progressing step-by-step should significantly strengthen the resilience of the EMU," said European Council president Donald Tusk.

He admitted that other ideas "need more time to mature, and have a longer term perspective."

The discussion launched on Friday is one of the main elements of the so-called Leaders' Agenda to relaunch the EU after Brexit and the financial crisis.

It was organised at EU-27 level in order not to exclude the eight non-euro countries and to have the broadest discussion possible.

But the debate remained at "short-term technical issues", French president Emmanuel Macron admitted.

He said that the "strategic and political discussion" will happen in March, "in order to know what we want to do to in five or ten years."

Before the meeting, one member state's EU ambassador had warned that the discussion would be to "turn around the balance between risk-reduction and risk-sharing, and the possible ensuing steps."

"The realistic line won," an EU official told EUobserver, referring to the 'risk-reduction' camp, which is led by Germany and the Netherlands.

However, he added that "we are far away" from having a plan for what the eurozone should look like in the long term.

'No taboos'

"What can we do in one year?" Klen Jaarats, the EU adviser to Estonian prime minister Juri Ratas told EUobserver, referring to the time left before the campaign for the 2019 European elections.

"We probably won't do 'European minister of whatever'. We won't probably do all the mutualisation of debt, and everything related to that," he said.

"If we get to adopting the banking union, capital markets union and finish off with that by the end of the legislative cycle, we've done pretty well," he added.

Officials on Friday said they hoped that when leaders meet again in March, Germany will have a new coalition government.


In a joint press conference, Merkel and Macron said that they will come up with a common position on the future of the EMU, which many in Brussels hope would help make progress.

"We debate about issues with no taboos," Macron said about his discussion with Merkel. "Then we arrive at concrete results."

Analysis

EU mulls post-Brexit balance of euro and non-eurozone states

Brexit will dramatically change the balance between EU members states that have the euro and those that don't. The thinking on the future of the eurozone is done at EU-27 level - but opposing camps will have to be reconciled.

Commission wants more centralised eurozone by 2019

EU leaders will discuss at their summit next week the commission's proposals, which include a European Monetary Fund and an EU finance minister - but no eurozone budget, as proposed by French president Emmanuel Macron.

Merkel in Paris for eurozone reform talks

Angela Merkel - who started her fourth term as Germany's chancellor earlier this week - is wasting no time on big issues like eurozone reforms. On Friday she is meeting Emmanuel Macron where the two will seek common ground.

Opinion

Ten Commandments to overcome the EU's many crises

A series of missteps - from the faulty institutional infrastructure of the euro, to the migration crisis - have left the EU battered and in near crisis. Here are ten steps to re-democratise the union.

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