06/29/2023 03:17 pm (act. 06/29/2023 03:17 pm)
The Eurogroup is pressuring Italy, the only country that has not yet ratified the reform of the European Stability Mechanism (ESM). Eurogroup head Paschal Donohoe said he understood Italy’s hesitation, but failure to ratify the ESM reform would mean other countries would not be able to use that instrument in the future.
“I fully respect the position of the Italian government when it says it does 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, which they may decide to use in the future. underway in Italy 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.” .
On further rate hikes in Europe, Donohoe said on Thursday that “we are all aware of the consequences of ECB decisions” but that “these challenges must be weighed against the alternative”. “The alternative is that if inflation in Europe, particularly in the euro zone, is not reduced, we will be 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 for years to come. So I think measures are needed to avoid such a scenario,” Donohoe said.
Italy has criticized the ECB’s decision to raise interest rates further in July, saying it will lead to a recession and risks doing more harm 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 holidays. of summer. to move. At the same time, Meloni criticized the ECB’s monetary policy. The ECB is taking 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 to raise interest rates doesn’t seem like the way to go,” Meloni said.