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Eurogroup pressures Italy to ratify the European Stability Mechanism

Eurogroup pressures Italy to ratify the European Stability Mechanism

The Eurogroup is putting pressure on Italy, the only country that has not ratified reform of the European Stability Mechanism (ESM). Eurogroup President Pascal Donohue said he understood Italy’s reluctance, but that the failure to ratify reform of the European Stability Mechanism meant that other countries would not be able to use this tool in the future.

“I fully respect the position of the Italian government when they say they do not want to use the EU bailout mechanism, but the ratification of the treaty will allow the expanded powers of the ESM to be made available to other countries, who may decide to use it in the future. I hope the debate in Italy takes that into account.”

Italy is the only EU member state that has not ratified the reform treaty due to disagreements within the government and concerns raised about the impact of the mechanism on fiscal sovereignty. In a message to European Council President Charles Michel ahead of the summit in Brussels on Thursday and Friday, Donohue said: “The ratification of the ESM Treaty is at the heart of our efforts and we will continue our engagement with Italy on this matter.”

On rate hikes in Europe, Donohue said Thursday that “we are all aware of the consequences of the ECB’s decisions” but “these challenges must be weighed against the alternative.” “The alternative is that if inflation does not fall in Europe, especially in the eurozone, we will become poorer,” said the Eurogroup chief.

“If we fail to bring inflation back to the ECB’s medium-term target, the consequences for EU living standards will be seen in the coming years. So I think measures are needed to avoid such a scenario,” Donohoe said.

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Italy has criticized the European Central Bank’s decision to raise interest rates further in July, claiming it will lead to a recession and risks being more harmful than the inflation it is trying to fight.

In a statement to parliament on Wednesday, Prime Minister Giorgia Meloni said it would be a mistake to refer the contentious issue of ESM ratification to the Italian Parliament now, indirectly confirming reports that she is planning a row over ESM after the summer recess. moves. At the same time, Meloni criticized the monetary policy of the European Central Bank. The ECB is taking an approach that can do more harm than good. “It is right to fight inflation with determination, but for many people the simple prescription of the ECB to raise interest rates does not seem like the way to go,” Meloni said.