While the two sides agreed to set up a euro-zone budget and beef up the role of the European Stability Mechanism -- the euro-area bailout fund -- they postponed decisions on some elements which could prove consequential. Chief among them: specifics on the size and conditions of the euro-area budget.
“There is a general feeling that there is some momentum, not towards a complete reform package but towards progress,” said Nicolas Veron, a senior fellow at Brussels-based think tank Bruegel. “It’s a political fact that what you have in the German Bundestag and in Italy has created a less favorable environment.” [...]
According to a roadmap endorsed by Macron and German Chancellor Angela Merkel, the budget should promote competitiveness, convergence and stabilization in the euro area, with resources coming from national contributions, Europe and revenue from taxes including a financial transactions tax or a levy on digital companies. The budget aims to help investment in innovation and human capital while other options examined include allowing nations in trouble to suspend their contributions, or establishing a European unemployment stabilization fund. [...]
In the roadmap, France and Germany agree to maintain a decision-making process where national government have a say. This seems to be a win for Germany, even though it should happen “while ensuring an effective, credible and rapid decision-making of the ESM backstop to fit the timing of a resolution case.”
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