Italy is very close to an election call that is guessing uncertain. His per capita income has not been growing for 15 years. And it is propitiating victim of next crisis: it accumulates a public debt stratospheric (of almost 130% of GDP) and at same time some delinquent loans exceeding 15% in hands of its banks. And yet Rome raises his voice: The Euro summit next Friday will be settled without just results, beyond umpteenth agenda with reforms needed by eurozone, but Italian Government presented very ambitious proposals yesterday.
The European Commission of Jean-Claude Juncker and France of Emmanuel Macron have made proposals, but absence of a government in Germany makes it very difficult for leaders ' meeting to pay off with results. Spain is satisfied that re is a debate in which roadmap for reform of Economic and monetary union is clear. Italy was much farr yesterday: it referred to a 13-page document calling for a eurozone budget in form of common unemployment insurance. And he made it clear that euro architecture cannot be complete without "a common insurance asset": Without Eurobonds that Chancellor Angela Merkel does not want to see in painting.
The Italian onslaught addresses agendas in which re is no consensus in Europe. Germany, Finland, Austria and Nerlands – creditor countries, net contributors – are fiercely opposed to any kind of measure that would make pocket more scratched. Merkel is aware that she has a commitment to Macron to move forward, but Berlin shields herself that she cannot take a single step forward as long as re is no government. For Germany, it is never time to shore up eurozone. Italy adopts opposite approach: euro's third economy aims to give a good wiggle to euro's economic architecture.
Brussels has presented a proposal to convert European Rescue Mechanism (ESM) into a European Monetary Fund that also serves as a firewall to be able to close banks. Rome goes furr: it believes that new FME should also be firewall that allows creation of a common deposit guarantee insurance, a mechanism to which Berlin opposes because it believes that it will pay for holes in banks of periphery. "Much has been done to reduce risks of banking sector, and risk-sharing measures must go in parallel," document states. The Italian position is an amendment to all of German proposals: Berlin has claimed a mechanism for restructuring sovereign debt, and wants to limit public debt to banks. Rome says that se measures are "procyclical" and that if y are approved "y will make economic and monetary union more fragile." Or countries like Spain think same, but have not said so clearly or black on white.
But most juicy is euro budget, which in Commission's proposals has been very diluted, with hardly any fresh money due to usual nein of Berlin. Rome states that euro "needs a stabilization function that will soften fluctuations of economic cycle", according to text, which country has had access to. The IMF, OECD, G-20 and many European countries, however, have not been able to raise ir voices in this debate so as not to rouse to Germany. "The eurozone is incomplete," transalpine government judges. Faced with a recession in a single country, re is internal adjustment mechanism (automatic stabilizers, such as each partner's unemployment insurance), but fiscal rules and euro's own design impede adjustments via exchange rate or demand-support policies. The result is an economic policy "procyclical, with deflationary biases, which has destroyed convergence in euro zone", according to Italian diagnosis.
To fight that drift, executive led by Paolo Gentiloni calls for "common unemployment insurance," which automatically activates when unemployment rises and supplements national unemployment insurance. Italy believes that interest-free loans would suffice in exchange for reforms, and that it could also be used to maintain public investment in times of crisis. And he bets on "a common insurance asset", Eurobonds that are anama in Germany, "to elevate financial integration."