Proposals to use a euro zone budget for economic stabilisation will be dropped, according to draft conclusions from the European Union summit in Brussels. They also decided to restrict any funds to long-standing EU goals of convergence among their economies and increase competitiveness.
Reactions are mixed. As reported by the Reuters news agency, the likely outcome of the summit is a blow to German Finance Minister Olaf Scholz, a Social Democrat who wanted any euro zone budget to play a stabilisation role via a shared unemployment insurance scheme for the zone’s 19 member states.
It is also a setback for the European Commission, which wanted the budget to stabilise investment spending in euro zone countries during crises, as capital expenditure usually is first to suffer when a government looks for savings in a downturn.
According to Reuters, the euro zone bailout fund has argued for a common fund that could lend to governments that get into trouble.
The draft conclusions are to be adopted on December 14 by all EU leaders except Britain, which will leave the EU next March, as part of a discussion on deepening the economic integration of the single currency area to make it more resilient to crises.
However, the draft does not go into any detail on what the two main purposes of the future budget — convergence and competitiveness — mean, leaving it to finance ministers to work it out. France and Germany said in June that the two objectives would be “delivered through investment in innovation and human capital.”
The conclusions are also careful to avoid any reference to another highly controversial topic in the euro zone integration plan — the European Deposit Insurance Scheme (EDIS), reported Reuters.