2023-06-29 13:24:23
The Eurogroup is putting pressure on Italy, the only country that has not ratified the reform of the European Stability Mechanism (ESM). Eurogroup chief Paschal Donohoe said he understood Italy’s hesitation, but the failure to ratify the ESM reform would mean other countries would not be able to use this instrument in the future.
“I totally respect the position of the Italian government when they say they do not want to use the EU bailout mechanism, but ratification of the treaty will allow the extended powers of the ESM to be made available to other countries, who may decide to use it in the future. I hope that the ongoing debate in Italy will take this into account,” Donohoe told the European Parliament.
Italy is the only EU member state that has not ratified the Reform Treaty due to disagreements within the government and concerns raised about the mechanism’s impact on fiscal sovereignty. In a letter to European Council President Charles Michel ahead of the summit in Brussels on Thursday and Friday, Donohoe said: “Ratification of the ESM Treaty is at the heart of our efforts and we will continue our engagement with Italy on this matter continue”.
On further rate hikes in Europe, Donohoe said on Thursday that “we are all aware of the consequences of the ECB’s decisions” but that “these challenges must be weighed against the alternative”. “The alternative is that if inflation in Europe, particularly in the eurozone, is not reduced, we will become poorer,” said the head of the Eurogroup.
“If we fail to bring inflation back to the ECB’s medium-term target, the consequences for living standards in the EU will be felt in the coming years. I therefore think that measures are needed to avoid such a scenario.” said Donohoe.
Italy has slammed the ECB’s decision to raise interest rates further in July, claiming it will lead to a recession and risks being more damaging than the inflation it is trying to fight.
In a statement to parliament on Wednesday, Prime Minister Giorgia Meloni said it would be a mistake to bring the controversial issue of ESM ratification to the Italian parliament now, indirectly confirming reports that she was planning a dispute over the ESM after the summer break want to move. At the same time, Meloni criticized the monetary policy of the ECB. The ECB is pursuing an approach that could do more harm than good. “It’s right to fight inflation with determination, but for many people the ECB’s simple prescription of raising interest rates doesn’t seem like the way to go,” Meloni said.
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