Eurogroup fails to agree on Covid-19 economic response

EU finance ministers failed to agree yesterday on a common economic response to the coronavirus outbreak that is still spreading across the continent. With Italy and the Netherlands at loggerheads over the issue of coronabonds and how to structure the loans from the bloc's bailout, the all-night 14 hour session ended without agreement.

The impasse between Rome and The Hague was still not broken when EU ministers ended the night-long teleconference early this morning. The quarrel means that no agreement was reached on a report for for Eurozone leaders that outlines measures to fight the crisis and a post-pandemic recovery.

Ministers are scheduled to reconvene tomorrow as the search goes on for enough common ground to put forwards recommendations to EU leaders.

German finance minister Olaf Scholz urged Eurozone governments “not to refuse to resolve these difficult financial issues” and support a “good compromise for all citizens”, in comments aimed at Italy and the Netherlands.

Scholz's sentiments were echoed by France's finance minister Bruno Le Maire, who added that all sides needed to respond to the extraordinary challenges of these times with an agreement that is ambitious.

The meeting came apart over relatively longstanding disputes between the northern and southern countries of the Eurozeone. Italy's finance minister Roberto Gualtieri demanded there be an explicit reference in any agreement of jointly issued bonds called "coronabonds".

The northern countries, headed up by Dutch finance minister Wopke Hoekstra, are not willing to give a commitment to common debt issuance and believe that the tools currently available are sufficient to deal with the crisis.

Italy and its southern allies also pushed for an overhaul of the European Stability Mechanism's credit lines to remove conditions on loans, which also met with great resistance from the northern countries.

Hoekstra added that it was still "too early to agree a total package". He said that the Netherlands was resolute in its opposition to the idea of jointly issued debt and would insist on countries making use of ESM money carrying out economic reforms.

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