Europe

Brexit and the excessive deficit procedure

The EU Finance Ministers have agreed to the excessive deficit procedure against Portugal and Spain. Wolfgang Schäuble refers to the European rules. And the Minister worry about Brexit and its consequences.

“These are heroes”, says the German Finance Minister, Wolfgang Schäuble, to the ranks of the Brexit advocates, meanwhile, competed in London for the withdrawal. “Ensure that the UK wants to escape and then run away…” The Trouble about this procedure is Schäuble. The situation after the Referendum, the Minister considers to be “volatile”, you know not exactly how it should go. There is a lot of uncertainty, and the Minister, wanted to rapidly have clarity in order to limit the risks. A further appeal to London, to begin with the exit negotiations in accordance with article 50 as soon as possible.

No, “way to go” in Europe

On the next steps in Europe, Wolfgang Schäuble, has clear ideas: “We have no Treaty change, we should not apply any force to waste”. A rejection of all the principle of reforms. Instead, the EU should apply the existing rules, and thus their ability to act to prove it. “We must now do everything to make Europe his difficult tasks in the 21st century. Century can meet”, he evokes. And for the Federal Minister of Finance, especially just to advertise what you can deliver. Otherwise, Europe will continue to lose confidence. Where he draws consolation from the fact that the Brexit vote in Germany, the consent to the EU have increased. Some citizens understand well, in the meantime, how valuable European unity is.

The Brexit vote provides for economic uncertainty in the EU

For the first Time: penalties against deficit sinners

Spain and Portugal are the first countries that the new rule-abiding to feel. Against both States has now been put into the excessive deficit procedure, because goals have missed their budget significantly. In may, the EU had shied away Commission it, because she was afraid of more anti-European emotions. But after clear Instructions from the Prime Minister’s round of the sanction mechanism was put in gear.

Within the next twenty days, the Commission will now make proposals, such as Lisbon and Madrid should be punished: no money are met, but a suspension of structural funding for 2017. From this EU Fund building projects and other funding be paid for. For Spain, there is more at stake here than a billion euros, for Portugal to 500 million. However, the States lose the money, not quite, because it can later be paid if the punished countries the budgetary rules to follow. “This is a reasonable incentive,” said Wolfgang Schäuble, and the criminal case is called a “Quasi-automatism”. The Affected persons react in different ways: Spain wants to take a tax increase and more money, in Portugal, criticises, in turn, the sanctions as “counterproductive”.

Portugal is a football-Champions of Europe, but lags well behind economically in Europe

To the question, but, why not also permanent deficit sinners France with sanctions, the Federal Minister of Finance with the Finger to the EU Commission. You will be responsible for the mechanism to trigger. Jean-Claude Juncker had abgebügelt the question recently, quasi-political: “Because it is France.” In contrast, Schäuble wants to apply the rules in the case of large and small EU member States alike. The “sin” he sees here, by the way, already in 2003, when Germany because of too high borrowing, although reprimanded, but not punished.

Italy’s Bank Crisis

The state of the Italian banks, the EU Finance Ministers just information. Only the representatives from the Czech Republic spoke openly of a crisis that is worse than the Brexit. Wolfgang Schäuble, by contrast, the dangers of deeper and once again refers to the European rules. Contained in the state aid plenty of “room for the right decisions”, a tap of the Finger for the Italian colleague Pier Carlo Padoan. At the same time, the European Bank criticized Schäuble indirect supervision: If he hear of bad loans, the question, why give it to you actually. In any case, you should first wait for the outcome of the Bank stress tests at the end of July.

The oldest Italian Bank with the most bad loans

A total of about 360 billion euros in allegedly bad loans at Italian banks. Prime Minister Matteo Renzi wants to rehabilitate contrary to the new EU rules on state aid, because he does not want to burden the Italian small savers and to the damage involved. There are two options: He can ask for the Euro bailout Fund, the ESM, to a utility, would have to meet requirements. Or he could apply for a Bail-in, which may be granted in exceptional circumstances, such as in the case of contagion risk for the rest of the financial markets in the Euro zone.

Are at risk here, however, is not only the banks of Italy, but, above all, Prime Minister Matteo Renzi. He would be overthrown, and would be EU-skeptic the helm, would have Europe, a serious crisis in a founding member of the neck. Prospects, which can Rob the sleep. Why Wolfgang Schäuble, musing finally, “Who now can not sleep well, can’t do the Job.”