The European Union has decided to give the eurozone its own budget following the calls for a single currency budget that was led by France earlier this year.
During a summit that was held in Brussels last Friday, it was agreed that a ring-fenced eurozone budget would help in reducing the economic differences between member states and make the currency more competitive on a global scale, even though the said agreement is a scaled-down version of the vision of Emmanuel Macron, the President of France.
The budget will be aimed only at improving the competitiveness and supporting convergence. It will be part of the long-term budget of the European Union starting in 2021.
The governments of the member states will decide on the key features of the budget by June next year.
The call for a eurozone budget was led by President Macron. It would encompass 19 of the 28 member countries and allow them to work on projects of transport, employment, and infrastructure collectively.
After the summit talks, Macron stated: “Many thought it was impossible.”
He added: “We were able to obtain a compromise.”
The budget was a concept that has been greatly opposed by some countries, particularly those that are in the north of Europe, however, Macron was also compelled to compromise on his original plans.
The size of the budget is yet to be decided as part of the negotiations on the budget of the European Union, however, it will be smaller as compared to the original plan of Macron for a fund equal to several percentage points of the gross domestic product. The finance ministers of the Eurozone were assigned with working out the details of the budget.
The leaders also agreed on the plans to strengthen its banking union and extend the lending options that are available to the European Stability Mechanism, the sovereign bailout fund of the European Union.