The European Commission is gearing up to sign off on the state budgets of eurozone member states after gaining the power to regulate budgets last year. Previously, it was left up to the national governments.Because of weakening economies across Europe, the spending grab has never been more pronounced as the EU body checks over draft budgets submitted by eurozone countries, before making an official decision next week.
Two stories in the Financial Times Friday morning illustrate this perfectly. First, there's an interview with Italian finance minister Pier Carlo Padoan, who accuses Brussels of using a "shaky analytical apparatus" to work out how much Rome should spend, suggesting that Italy could use more room to boost its struggling economy.
The second is a head-to-head between the eurozone's two biggest economies, Germany and France. Gunther Oettinger, Germany's EU Commissioner, slammed the French government in a piece for the FT, criticising Paris for a lack of budget cuts and reform ambition. Here's a snippet:
Germany’s European commissioner has questioned whether President François Hollande has the “willingness to act” to reform the French economy in a blunt warning set to add to tensions between Berlin and Paris.
Günther Oettinger, a political ally of Angela Merkel, chancellor, said France must live up to commitments made last year to cut its budget deficit, and said its new spending plan does not reform the pension system, cut labour costs or lower corporate taxes enough.
This is a bit of schaudenfreude from Germany, which is heading for its first balanced budget in 45 years. But with such meagre economic growth, most governments are now fighting for table scraps from the European Commission, taking any fiscal giveaways on offer.
The official decisions on Europe's budgets are released next week, so keep an eye out.
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