World Economy

Madrid Pushing for Eurozone Budget

Madrid Pushing for Eurozone BudgetMadrid Pushing for Eurozone Budget

Spain will call for a eurozone budget and finance minister to oversee it at an August 28 summit with France, Germany and Italy, Prime Minister Mariano Rajoy said Monday.

“We are going to continue to work to deepen economic and monetary union,” conservative Rajoy said after meeting King Felipe on Mallorca, AFP reported.

“Spain is backing a European finance minister and a European budget which will progressively bring closer together living standards and the wealth of all European countries,” said Rajoy, who will attend the summit in Paris hosted by French President Emmanuel Macron, a fellow backer of the policies.

“Spain is going to bet on the existence of eurobonds, a European treasury emitting eurobonds,” said Rajoy, adding that would bolster eurozone market credibility.

Spanish Finance Minister Luis de Guindos in June urged deep reform of the eurozone to include the creation of a “European monetary fund” and decide on “a certain percentage of national budgets”.

De Guindos told the Financial Times that Brexit and the Trump presidency were both factors pushing Europe and the single currency zone towards greater integration, although the proposed reforms would require amending existing treaties.

German Chancellor Angela Merkel has indicated she would support the proposals although there is strong public resistance in Germany and she is up for re-election in September.

Merkel has said she is open to the creation of a finance minister and budget for the eurozone as proposed by Macron. “I have nothing against a eurozone budget (and) we can talk about creating a European finance minister,” Merkel said after talks in Paris with Macron last month. “We agree that the eurozone must be stabilized and further developed,” she said.

Meanwhile, in an interview with French regional daily Ouest-France in July, Macron, who also favors deeper European integration, said Germany was benefiting from a “dysfunctional” eurozone, euractive reported.

“I have never reproached Germany for being competitive […] but a part of German competitiveness is due to the dysfunctionalities of the eurozone, and the weakness of other economies,” he emphasized.

Macron reiterated, though, that he was not in favor of turning national debts of eurozone countries into a single pool of eurozone debt.

“Germany … has a strong economy, but it has demographic weaknesses, economic and trade imbalances with its neighbors and shared responsibilities to give the eurozone the future it deserves.”

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