Daily Management Review

French Finance Minister: the euro zone is not sufficiently prepared for a new crisis


10/29/2018


The budget crisis in Italy does not pose a danger to the European Union, but the euro zone is not sufficiently prepared for a new economic crisis, French Finance Minister Bruno Le Maire said in an interview with Le Parisien on Sunday.



APCMA France
APCMA France
“We do not see any negative consequences [of the situation in Italy] in Europe,” Le Maire said.

“But is the euro zone sufficiently prepared for a new economic or financial crisis? My answer is no. It is extremely important to do what we have offered to our partners to have a strong banking union and euro zone investment budget,” added the French Finance Minister.

Last week, the European Commission rejected Italy’s draft budget. The negative conclusion means that the executive body of the EU is asking the Italian government to review and resubmit its budget plan.

Italy set a budget deficit target of 2.4% of GDP in 2019 (three times the previous target), 2.1% in 2020 and 1.8% in 2021

The increase in the target deficit compared to the previously agreed level has caused dissatisfaction with the European Commission. Italy will now have three weeks to make changes to their spending plans and resubmit them to Brussels.

Euro zone officials said that the unprecedented standoff between Rome and Brussels is likely to delay the reform process.

Le Maire also said that French banks with branches in Italy issued corporate and consumer loans totaling € 280 billion.

"This amount is manageable, but significant," he said.

Meanwhile, France, the second largest economy in Europe, received a letter from Brussels warning that its planned debt reduction in 2019 did not match the proposals that Paris had previously agreed with the EU.

France’s draft budget for 2019 provides for a reduction in the structural deficit by 0.1% this year and by 0.3% in 2019. In April, Paris agreed with Brussels to reduce the structural deficit by 0.6% of GDP per year.

source: leparisien.fr






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