BRUSSELS – The Financial Times Deutschland (FTD) reveals that European diplomats thinking over the possibility of a separate budget of around 20 billion Euros ($26 billion) in order to improve monetary union in the region.
There is still no clear definition of what a single central budget would entail, but Germany strongly supports the idea as a way of coordinating transfers among member states. Though France is in favour, there are countries that oppose the idea.
In the early release of an article to be published on Monday, FTD said the sum under consideration amounted to about 0.2 per cent of the common currency bloc’s gross domestic product (GDP). It did not cite its sources.
“The budget for the whole European Union currently totals around 130 billion Euros a year, which is just over 1 per cent of EU economic growth,” the paper wrote. “A euro zone budget of around 20 billion euros would mean extra costs of around 0.2 per cent of euro zone GDP.”
“Germany would be liable for just under 6 billion euros a year,” the FTD added.
The single budget proposal was first sketched out by Herman Van Rompuy, the president of the European Council, in a paper circulated in September to stimulate the debate on how Europe’s monetary union should be strengthened.
In the paper, he said that a “fully fledged fiscal union” among the 17 countries that share the Euro could involve the creation of a single treasury office and “a central budget whose role and functions would need to be defined”.
Those suggestions have since been refined into guidelines that will form the basis of discussion among EU leaders at the summit on October 18-19. The idea will also be explored among Eurozone finance ministers at a meeting in Luxembourg on Monday.
Image Courtesy: Verdy_p (own work), via Wikimedia Commons