Italy and the ESM, Giorgetti takes time: the banking union is at risk

Continue to hold court there ESM-Italy issue in the European context. The topic was discussed again following the meeting of Eurozone finance ministers, in which Giorgetti obviously took part.

The comment of the President of the Eurogroup, Paschal Donohoe, is decidedly explanatory: “Minister Giorgetti updated us on the situation, after the negative vote to ratify the ESM treaty. We can’t make any progress on this front but we will continue our commitment to Rome”.

Italy’s step backwards

Economy Minister Giancarlo Giorgetti went to Brussels to explain the reasons for Giorgia Meloni’s government. Obviously we are talking about the failure to ratify the changes to the ESM reform. The latter sees its future as uncertain and this generates a certain alarm among EU countries.

Italy is the only member to have taken a step back and, as explained by Donohoe, this situation “means that our efforts towards a Banking Union continue to lack of common support for the Single Resolution Fund. We continue to lack a powerful tool to help us deal with the effects of banking difficulties.”

At present we are taking time, in fact, Donohoe has committed to continuing this collaboration but, in concrete terms, we will return to the topic in the future (next, hopefully). To date, it is important to underline, ratification has been reached by 19 European parliaments. Only Italy is missing.

“I regret the decision of the Italian Parliament. It is a missed opportunity to make the Eurozone more resilient and strengthen the Banking Union. Many questions remain outstanding with this lack of ratification. Fortunately, all this happened in a phase in which we are not experiencing a financial crisis.” These are the words of Pierre Gramegnadirector general of the Mes.

European economy: the prospects

At present, signs of détente are arriving from Brussels. It is considered unthinkable, for now, to proceed without Italy. The intention is therefore to identify a fair compromise with the other 19 Eurozone countries.

An unfruitful first meeting in 2024, therefore, which ended with a postponement of that fundamental step forward towards the desired European Banking Union. All of this, as mentioned, in a situation of relative tranquility on the front of the EU banking system, solid and free of visible crises on the horizon.

However, the EU has an obligation to look to the future, or the economic prospects in light of growing international tensions. Just think of the document of Bild on Russia’s possible military actions against NATO. All this fits into a potentially risky global scenario. A loose European Union could have enormous difficulties in competing with the United States, China and beyond. In this respect Mario Draghi is working on a real guide to face the challenges of tomorrow, which is closer than you might think.

Meanwhile, an important date is approaching, as highlighted by the European Commissioner for the Economy Gentlemen. In fact, next February 15th, there will be the new winter economic forecasts: “Uncertainty remains high in terms of disruptions to the EU’s GDP and inflation. The risks to growth are oriented to the downside.” This is with reference to the ongoing wars in Ukraine and the Middle East, as well as tensions on the Red Sea, which are affecting maritime routes, with a foreseeable increase in costs.