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30th Jun 2022

Top eurozone officials meet amid alarm on Italy

  • Barroso (l) and Van Rompuy - market events are outpacing slow-moving political discussions (Photo: consilium.europa.eu)

Top eurozone officials are meeting on Monday (11 July) morning to discuss the debt crisis in the 17-nation single currency region amid concerns that it could spread to Italy.

European Central Bank chief Jean-Claude Trichet, EU monetary affairs commissioner Olli Rehn, eurozone chief Jean-Claude Juncker and Jose Manuel Barroso, the head of the European Commission, are attending the specially-convened event in Brussels.

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The meeting, called by European council President Herman Van Rompuy, is expected to focus on the second bailout for Greece and its implications for broader eurozone stability.

Discussions on the fresh Greek package stalled earlier this month over disagreement on the nature of private creditor involvement.

At the time, it was said talks would probably restart in September, after the summer recess. But events once again overtook the political process - Van Rompuy called the event on Saturday, the day after Italian stock markets suffered a dramatic fall of 3.5 percent.

Markets became jittery after Prime Minister Silvio Berlusconi publicly criticised his widely-respected finance minister Giulio Tremonti.

There is also concern about the health of Italian banks, with the results of EU stress tests due out on Friday. At the end of last week, the premium which Italy pays to borrow money compared with Germany's soared to its highest point since the eurozone came into being.

Monday morning's extraordinary meeting comes ahead of an earlier-scheduled meeting of eurozone finance ministers in the evening.

The Financial Times reports that eurozone leaders are for the first time to accept that Athens will default on some of its bonds as a part of the second bailout.

With talks on the new package still at an early stage, the paper says the new measures could see a further lowering of interest rates on the bailout loans in a concession to Athens.

Italy: Euro crisis meeting could strain coalition

Italian leader Silvio Berlusconi's coalition government is to face a major test at 6pm local time on Monday, when ministers meet to push through austerity measures under pressure from fellow EU leaders.

Italian 'national consensus' urgent, says Brussels

The European Commission has called on Italy to build a "national consensus" between political parties and with the unions to assure the implementation of austerity measures and structural adjustment in the wake of a surprise downgrade in the country’s credit rating by Standard & Poor’s.

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