Despite Chancellor Merkel's insistence to the contrary, officials in other capitals privately claim that many of the hard decisions facing the eurozone will only be taken up after a new government in Berlin is in place.
Officials in other capitals privately insist many of the hard decisions facing the eurozone will only be taken up after a new government in Berlin is in place. Some of the most critical challenges facing the single currency are outside the hands of EU decision-makers.
In two critical areas, the future of eurozone bailouts and the mad dash to complete an EU “Banking Union”, the end of German election season will mark the restart of many of the most fraught debates the single currency has been grappling with for three years
The differences between the Greek prime minister and troika set up a fight over whether eurozone lenders should take losses on their existing bailout loans to live up to the November deal and what new burdens will be put on Greece in order to keep the programme on track.
Senior troika officials say there is little chance of Lisbon escaping a second full-scale bailout. A second bailout will probably need to be agreed by the end of the year, or early next year at the latest.
While Ireland’s economy is one of the EU’s most open and Dublin housing prices are rebounding, officials have been surprised at three straight quarters of economic contraction.
Even in Berlin there is quiet acceptance that a compromise is necessary. The open question will be how much control nations cede to the new authority and what Germany will demand to fill the financing gap while a levy on industry builds up the resolution fund.
© Financial Times
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