Agreement on euro zone budget was unthinkable a few months ago, says Government – The Economic Journal

Budget for euro zone will support structural reforms and public investment - The Economic Journal


The government argued that the compromise reached last night was unthinkable a few months ago, although the agreement on a budget instrument for the euro zone left several issues open.

"I think it is a commitment that is very important for Europe. We do not have to walk many months back to be in the scenario where few believed that it was possible to move towards a budget for the euro zone. Therefore, what has arrived is very important, "said the Secretary of State for Finance in Luxembourg.

Ricardo Mourinho Félix, who represents Portugal at the Eurogroup meetings since the election of Minister Mario Centeno as president of the informal forum of finance ministers of the euro zone, spoke to reporters after a negotiating 'marathon' of about 15 hours, concluded near the 04:30 local time last night in Luxembourg where Finance Ministers reached a compromise on the main features of the budget instrument, but issues such as the capacity and funding of this budget were not yet fully defined.

Insisting that "not a few months ago it was unthinkable" a compromise on the euro area's own budgetary capacity, the Secretary of State considered that this instrument, aimed at convergence between the countries of the single currency and the competitiveness of the euro zone, is particularly important "in a context of global competition and trade tensions."

Mourinho Félix said that in his speech he defended the need for "investment to be taken in a broader sense: investment in education, investment in human capital" because, combined with investment in physical capital, this "allows increase a country's growth potential as long as the choices are made well. "

The Secretary of State was convinced that at next week's Euro Summit – in which Centeno will present the compromise reached – European leaders will give impetus to this project, "as they have already done at past summits," and said he was that all will continue to work "with the same commitment" to have all the elements closed in order to implement the budget "as soon as possible", possibly in 2021, coinciding with the new multiannual financial framework of the EU (2021-2027) .

The future budgetary instrument for convergence and competitiveness in the euro area will support both structural reforms and public investment, in line with the general principles agreed at dawn today by the European Finance Ministers in Luxembourg.

The compromise reached after some 15 hours of discussions, in a large format Eurogroup (with the participation of Member States that are not part of the euro zone), defines some general principles and main features of the budgetary instrument, but the proposal that Mário Centeno will present to the leaders at next week's summit, as mandated, still leaves open key issues such as the financial dimension and funding.

Despite the ambition of countries such as France, Spain and Portugal, the resistance of some Member States to the very idea of ​​a euro-zone budgetary capacity, with the Netherlands at its head, prevented a more comprehensive and precise agreement, several European sources pointed out. Lusa agency.

Recognizing that much work remains to be done, and in essential respects, Eurogroup President Mario Centeno and European Commissioner for Economic Affairs Pierre Moscovici stressed that "small steps" have been taken, vital for the budgetary instrument becomes a reality.



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