Eurozone needs parliament, budget, says EU’s Moscovici

WARSAW: The eurozone should have its own parliament and budget to cap inequalities between its richer and poorer members that could tear the bloc apart, the EU’s economy commissioner said in an interview published yesterday. “It’s necessary to create a eurozone budget. And this will not be possible without creating a parliament for the currency union, in order to make spending subject to democratic control,” Pierre Moscovici said in an interview with Poland’s Rzeczpospolita broadsheet daily.

Deeper integration of the eurozone is “absolutely necessary in order to contain the divergence of the economies that make up the currency union,” he said of the troubled 19-country bloc. “If we continue to have a north that is well off and a south that is in difficulty, at some point this will result in the rejection of the European project,” Moscovici added. Eurozone member Greece, with its mountain of debt towering at 180 percent of annual output, was nearly forced out of the common currency before agreeing to painful austerity measures in exchange for bailouts.

Moscovici told Rzeczpospolita that a eurozone “parliament and budget would also require an executive power: a eurozone finance minister”. The European Commission intends to “present an analysis of future eurozone integration” this Wednesday before consultations with members of the bloc, he said. The reforms evoked by Moscovici would require the approval of EU nations in the form of making changes to the bloc’s treaties.

But Poland and other younger eastern EU members still outside the eurozone have indicated they will oppose any such moves. Warsaw is worried that it could be left behind in the push towards a “multi-speed” EU, backed by heavyweights France and Germany as the bloc prepares for Brexit. Moscovici however said there was “no reason for concern” insisting that he “rejects the idea of a two-speed Europe” and that “Poland is not a second class” EU member. “I’m convinced that we can continue integration among the 27 members, while also allowing those who want to move forward-as is the case with the eurozone-to be able to realise their plans,” the commissioner added.

Corporate lending picks up in April

Elsewhere, corproate lending in the eurozone, a key gauge for measuring the health of economic recovery, accelerated slightly in April to hit a near eight-year high, ECB data showed yesterday. Growth in loans to non-financial corporations picked up to 2.4 percent in April from 2.3 percent in March, its highest level since June 2009, the European Central Bank calculated in regular monthly data.

The ECB closely monitors lending in the 19 countries that share the euro because it believes that businesses are more likely to spend, hire and invest if cash is more readily available, powering the economy towards recovery and inflation towards the central bank’s target of just below 2.0 percent. Credit almost dried up completely during the financial crisis and so the ECB took a number of measures to kickstart lending: cutting interest rates to historic lows, offering low-interest loans to banks, and pumping more than 1.8 trillion euros so far into the financial system through bond-buying.

The measures worked and credit has indeed picked up noticeably. The April data showed that lending to households also increased slightly to 2.6 percent, powered by faster growth in borrowing for both mortgages and general consumption. “The credit market looks positive again in April... it shows that businesses are looking more confidently into the future,” said Joerg Zeuner, chief economist of Germany’s KfW bank, of the adjusted business lending figure. —Agencies