31 July 2014

EIM - Member States July 2014

Member States:

Italy: IMF Article IV consultation mission

The recovery remains fragile and unemployment unacceptably high, highlighting the need for bold and quick policy actions. Deep structural changes are needed to make Italy a more dynamic country that adapts quickly to a changing world and is home to innovative entrepreneurs. 

Spain: moderate recovery

Since the second half of 2013, the Spanish economy has perceptibly been experiencing a recovery, which began with positive, moderate quarter-on-quarter rates of change in GDP as from 2013 Q3 and which has continued in 2014 to date.

Notably,  Spain promised to make an early repayment of €1.3 billion to the EU. The government announced that it will make an early repayment of 1.3 billion euros from a total of more than €40 billion in European financial assistance.

Greece: adopting reform measures

Greece has committed itself to the immediate fulfilment of some prior actions required for the disbursement of the next bailout sub-tranches. Meanwhile,  German Finance Minister Wolfgang Schäuble reckons a third bailout for Greece would be less than €10 billion, significantly smaller than each of the previous aid packages. And the ECB's Benoît Cœuré notes encouraging signs in the Greek banking sector- although, 'We now have to wait for the outcome of the ECB’s comprehensive assessment.'

Ireland: First post-programme monitoring discussions

The Irish economy is in the early stages of recovering from an exceptionally severe banking crisis. Following a smooth exit from the EU-IMF supported programme, strong job creation and other indicators suggest Ireland’s economic recovery is broadening.

But the  Irish Finance Minister Michael Noonan sees major difficulties in securing EU help with bank debt-other EU states are in a worse situation and unlikely to vote for support measures.

Portugal: Statement by the EC, ECB, and IMF

The European Commission, the European Central Bank and the International Monetary Fund 'Take note of the Portuguese government's intention to await the pending Constitutional Court rulings concerning adopted budgetary measures before formulating a comprehensive response. These rulings are not expected before the IMF and EU programme expires at the end of June. We take note of the government's decision not to seek an extension of the program and to allow its expiration without completing the 12th and final review and without receiving the associated final tranche."

Cyprus: European Commission Adjustment Programme

The Commission has published its fourth report reviewing implementation of the economic adjustment programme for Cyprus. Programme implementation remains on track.

Cyprus’s president says the bailed-out country could start borrowing from international markets by the end of the summer, a full year ahead of what its creditors had initially anticipated.

United Kingdom: reports on benefit of EU trade and costs of Brexit

In a report 'Trading Places' for British Influence, Lord Hannay, former British Ambassador the EU and the UN, analyses the trade implications for the UK outside the EU. “Would we have a better chance on our own [in securing a trade deal with the US] with only access to a market of 60 million consumers to offer in return as opposed to one of 500 million?

Are there alternative ideas? I do not see them."

Meanwhile, the CER published its  final report on the Economic Consequences of leaving the EU: The Centre for European Reform's experts finds that, after leaving the EU, the UK would face an invidious choice: sign up to the single market’s rules, or suffer economic damage.

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© Graham Bishop