POLITICS & POLICY
The Greek bailout is under the spotlight, as the German Chancellor Angela Merkel seems to have changed her longstanding view on how to deal with the crisis of the southern European Member State. In a press conference, Merkel said that the German Government agreed with her French counterpart on the possibility of developing the European Stability Mechanism (ESM) into a fully-fledged European Monetary Fund. The ESM could thus replace the International Monetary Fund in the execution and monitoring of bailout programmes for countries in economic distress, such as Greece. Over the past few years, Germany’s authorities have always stressed that the IMF’s involvement in rescue programmes was a necessary condition for Berlin to grant its support.
Meanwhile, the President of the Bundesbank, Jens Weidmann, claimed that the European Central Bank (ECB) is slowly moving away from a loose monetary policy. According to Weidmann, the recent rise of inflation in the Eurozone makes such a policy change more likely than ever. Similarly, German Finance Minister Wolfgang Schäuble said he is “expecting a normalisation of the monetary policy” in the near future, Handelsblatt reports. Schäuble defended his argument claiming that growth rates in the Eurozone are slowly moving upwards again.
Nevertheless, less optimistic views were expressed by the former Greek Finance Minister Yanis Varoufakis, who claimed that the European Union, and more specifically the Eurozone, are still in uncharted waters. In an interview with Die Welt, Varoufakis called for European leaders to back an ambitious investment plan to revive the continent’s economy. Varoufakis also argued that mainstream economic thinking should shift its focus from “competitiveness” to “productivity”. Last but not least, the Greek economist argued that Italy represents today the weak link in the EU’s economic system. Rather than focusing on Greece, EU leaders should keep an eye on the outlook of the biggest southern European Member State, as it was hit by a massive capital flight over the past few months. A recent analysis published by Die Welt argues that, indeed, Italy represents the main reason for the ECB not to move away from its expansionary monetary policy, yet.
In other news, Brexit makes the headlines in the UK. According to Government insiders, British officials are leaving aside the so-called “have a cake and eat it”. In other words, UK authorities will need to make a choice on whether to prioritise economic interests or political control in the final Brexit agreement. Over the past few weeks, the European media landscape highlighted the weakness of the UK leadership vis-à-vis its European counterparts, as the latter are gradually shifting their focus on other issues, such as the reform process of the Eurozone. Meanwhile, the car-making industry of the UK issued a new warning, claiming that it will be forced to reduce its labour force as a result of a likely slowdown of the economy. Likewise, a new report from the Die Welt highlighted the negative impact of Brexit on the German fishing industry.
The protection of the rights of EU citizens in the UK is another pressing issue for authorities in both Brussels and London. According to a recent survey conducted by Opinium and reported by The Guardian, almost half of British citizens support the extension of voting rights to EU nationals in the UK. The results of the study further weaken the position of Downing Street, who is proposing a rather conservative deal on the matter to its European counterpart in the framework of Brexit negotiations.
Meanwhile, the President of the European Court of Justice, Koens Lenaerts, warned that British companies will still desire the jurisdiction of the ECJ even after the conclusion of Brexit negotiations. Over the past few years, the ECJ was targeted by UK Eurosceptic parties and movements as one of the main hurdles to the development of the UK business sector.
“I could be interested in running for the European Commission Presidency”.
Source: Die Welt, 02.07.2017
The unemployment rate in Italy as of May 2017–an increase of 0.2% compared to the previous month. Meanwhile, European growth rates are going up, mostly led by the German, Austrian and Dutch economies.
Photo Credits CC: Tobias Koch
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