Wednesday, 19 June 2019

Questions (28)

Thomas P. Broughan


28. Deputy Thomas P. Broughan asked the Minister for Finance the position with regard to the proposed introduction of a budget for the 19 eurozone countries in the EU; and if he will make a statement on the matter. [25244/19]

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Oral answers (6 contributions) (Question to Finance)

The eurozone budget is a major project of the French President, Mr. Macron, and other European federalists. The meeting in Luxembourg seems to have been very disagreeable. I believe the Dutch finance Minister threatened to walk out after 12 hours of negotiations. At the end of it all, the meeting resulted in a budgetary instrument for competitiveness and convergence. What exactly is happening regarding the eurozone budget?

Last December, leaders of the euro area member states requested finance Ministers to work on the general features of a possible budgetary instrument that would be focused on competitiveness and convergence. This instrument will be open to members of the euro area and to member states currently outside the euro area who are preparing to join the euro. Its aim is to support reform and investment projects that strengthen competitiveness and convergence in the euro area.

Leaders agreed last December that the size of the budgetary instrument would be agreed in the context of the wider negotiations for the post-2020 multi-annual financial framework, MFF, and agreement on the general features would be a step in putting this in place.

At a meeting of the Eurogroup in inclusive format on 13 June - in other words, non-eurozone finance Ministers were present - my colleagues and I agreed on a term sheet that outlines the general features, representing the culmination of six months of work on this proposal. We agreed on the general principles underpinning the budgetary instrument and on its key features. We also agreed that the size of the financial envelope for the instrument would not be determined until it is discussed within the context of discussions on the wider MFF. This is not due to take place until we have had further discussion on the MFF, most likely in the autumn.

On 21 June, this week, the Taoiseach and leaders of the other euro area member states will participate in the euro summit and will be updated on progress we have made.

I was present for the whole meeting on 13 June, which lasted until 4.30 a.m. on Friday. It was a difficulty meeting at times but it was not disagreeable. There was appreciation of all that we need to find ways of strengthening how the eurozone is formed. It is a question of how.

Having a eurozone budget was always a key ambition of European federalists, such as President Macron. The aim is to have many budgetary decisions transferred to Brussels eventually. The Minister said that if we had this kind of instrument, his policy would be to have it anchored in the general EU budget. Is that the position? I note from reports of the meeting that we are included with the Netherlands, Austria and Finland as countries that take a very critical view of the proposal. What size is envisaged? President Macron obviously wanted a percentage of all European GDP. This involves a massive fund. This does not seem likely to be the case. It seems that it will be between €15 billion and €18 billion. What role will this House have, even after the meeting this week? Will we have a chance to make a decision?

On the policy background, it would probably be unfair to say this is a consequence of economic federalism. First, President Macron wants a stronger and more integrated Europe but he is as aware as many former French Presidents of the importance of national sovereignty. Second, with regard to the scale of the funding instrument, it is difficult to put a figure on it because there are very contrasting views around the table on how big it should be. Third, this is why I am putting forward the case that it needs to be inside our overall European budget. I am eager to avoid being in circumstances in which there is a need both to fund an increased European budget, which will be the case and in which Ireland will play a role, and meet another demand, the exact magnitude of which is difficult to quantify. That is why I hold the view, along with some member state colleagues, that it is better to deal with the funding in the context of our discussions on the MFF, which allows us to put a figure on what is required. I am always available to answer questions on this, particularly at meetings of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach and the Committee on Budgetary Oversight.

Are French newspapers correct in saying that finance Ministers have effectively approved the eurozone budget and that the European Council will now do so? In other words, have we embarked on this road? They seem very positive about the meeting, writing that President Macron has secured a victory and that we are going forward on this basis.

Regarding the size of the fund, I note that we are net contributors to the overall EU budget. That looks likely to be even more the case as the years go by. We may be significantly affected by Brexit. The Minister and his colleagues have spoken about infrastructural projects, stabilisation of economies and so on. Will this fund be of much value to Ireland? We will not be drawing down from it. In fact, it will principally go to some of the weaker and newer economies that may join the European Union, such as North Macedonia.

It is worth making clear that the eurozone's so-called budgetary instrument for convergence and competitiveness, BICC, will almost certainly only apply to countries in the eurozone. This has been at the heart of the debate on it. Regarding the claims of French newspapers, it is up to other countries' newspapers and governments to decide whether they have made progress on their national priorities. It has been agreed that there is value in putting an additional eurozone mechanism in place to help countries that get into difficulty. That is of value to us because we have learned that sharing a currency with other countries means we all depend on the strength of each other. That is why on balance there is value in a budgetary instrument like this. There is a "but". First, its funding has not been agreed; and second, its governance has not been agreed. They are matters in which we have a national interest and on which I will update the House as we move forward on this issue.