Since the UK left the EU the 19 members of the Eurogroup now control the EU Council and Parliament, having 70% of the vote. (See EU Document on Qualified Majority Voting, 80% of EU decisions use QMV).
Had Italy not joined the Eurozone it would have been able to expand
it's debt after the financial crisis of 2008 so that its economy might
have recovered further by 2020. Instead of using stimulus measures to
escape the 2008 crisis Italy was forced by the EU and Eurozone to adopt
austerity measures. Incidentally, the UK also felt obliged to implement EU austerity after 2008 to comply with EU rules - see Parliamentary Report on EU Excess Deficit Procedure in the UK. As a good Eurogroup member Italy found itself in near recession as the Coronavirus outbreak hit.
Late last night the President of the Eurogroup, Mario Centeno, announced measures to support its members during the Coronavirus crisis. This was reported as: ".. a €100 billion loan plan for unemployment benefits, €200 billion in loans for smaller businesses, and access to €240 billion in loans for euro-area countries to draw on from the eurozone bailout fund." New York Times.
It took weeks for the Eurogroup to formulate a package for Italy and the Italians will be disappointed. The total package was for €540 billion euros - about the same as the UK is spending to ameliorate the crisis. The UK is spending £350 bn on assistance to business alone. Apart from being a very small amount when spread over 19 countries the Eurogroup package comes with powerful terms and conditions and binds non-Eurogroup EU Member States.
The €200 billion for loans to smaller businesses is implemented by the European Investment Bank so the 8 non-Eurogroup members of the EU must support the Eurogroup decision and contribute to the Eurogroup bailout scheme. The €100 billion to tackle unemployment is also derived from a pan-EU scheme called "SURE".
Only the €240 billion is new money coming from the ESM (European Stability Mechanism) of the Eurogroup. However, this new money comes with strings attached. As the European Council point out the money is disbursed as loans which involve "agreement to implement appropriate policy measures over a certain period of time". In other words the Italians must do as the Northern Countries say.
Like Greece during the Eurocrisis, Italy will bluster and complain about having its economy controlled by the Germans and other Northern EU States but also like Greece the Italians will finally fall on their knees and beg for the money. They have no other way out.
10/04/2020
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| President Mario Centeno |
Late last night the President of the Eurogroup, Mario Centeno, announced measures to support its members during the Coronavirus crisis. This was reported as: ".. a €100 billion loan plan for unemployment benefits, €200 billion in loans for smaller businesses, and access to €240 billion in loans for euro-area countries to draw on from the eurozone bailout fund." New York Times.
It took weeks for the Eurogroup to formulate a package for Italy and the Italians will be disappointed. The total package was for €540 billion euros - about the same as the UK is spending to ameliorate the crisis. The UK is spending £350 bn on assistance to business alone. Apart from being a very small amount when spread over 19 countries the Eurogroup package comes with powerful terms and conditions and binds non-Eurogroup EU Member States.
The €200 billion for loans to smaller businesses is implemented by the European Investment Bank so the 8 non-Eurogroup members of the EU must support the Eurogroup decision and contribute to the Eurogroup bailout scheme. The €100 billion to tackle unemployment is also derived from a pan-EU scheme called "SURE".
Only the €240 billion is new money coming from the ESM (European Stability Mechanism) of the Eurogroup. However, this new money comes with strings attached. As the European Council point out the money is disbursed as loans which involve "agreement to implement appropriate policy measures over a certain period of time". In other words the Italians must do as the Northern Countries say.
Like Greece during the Eurocrisis, Italy will bluster and complain about having its economy controlled by the Germans and other Northern EU States but also like Greece the Italians will finally fall on their knees and beg for the money. They have no other way out.
10/04/2020
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