Noonan to brief EU on bailout exit strategy
Senior euro zone sources stress it is ‘economically viable’ for Ireland to exit without precautionary credit line
European commission president José Manuel Barroso said German competitiveness was not the issue, but “whether Germany, the European Union’s economic powerhouse, could do more to help the rebalancing of the European Union economy”. Photograph: Reuters/Kai Pfaffenbach
Minister for Finance Michael Noonan will update euro zone finance ministers on Ireland’s bailout exit strategy at a meeting of finance ministers in Brussels today, amid continuing expectations Dublin will choose to exit the bailout programme without the help of a precautionary credit line.
It is understood the issue was not discussed at Tuesday’s Cabinet meeting in Dublin. As a result, approval is unlikely to be sought at today’s euro group meeting.
There is a growing sense that Ireland will choose to return to full private market funding unaided, with senior euro zone sources stressing this week it was “economically viable” for Ireland to exit without a precautionary credit line in place. It is understood that Brussels prefers a “clean break” scenario for Ireland in light of the currently favourable market conditions.
Germany’s trade surplus
The finance ministers of the euro zone member states meet a day after the European Commission initiated a review of Germany’s current account surplus, as part of its annual macro imbalances procedure. Although the option of imposing fines is still months away, Brussels will examine Germany’s trade surplus, which has been in breach of the 6 per cent threshold set out by the European Commission since 2007. The unprecedented move follows criticism by the US Treasury Department last month that Germany’s booming export sector was hampering euro zone growth.
European commission president José Manuel Barroso said German competitiveness was not the issue, but “whether Germany, the European Union’s economic powerhouse, could do more to help the rebalancing of the European Union economy”.
EU commissioner Olli Rehn said the persistently high surplus indicated Germans are “persistently investing a large part of their savings abroad”.
There was a strong reaction from Germany to the decision, with one leading member of Angela Merkel’s Christian Democratic Union describing the move by the commission as an “affront”. General secretary Hermann Gröhe argued exports are the “cornerstone of our prosperity”.
News of the move divided opinion among German economists, with many accusing the European Commission of demanding a planned economy. “This is the result of the market, one shouldn’t directly intervene in this,” said Prof Volker Wieland, one of Germany’s five economic wise men.
He was contradicted by fellow wise man Prof Peter Bofinger, who said criticism of the German surplus was justified.