Merkel, Macron agree eurozone budget in 'new chapter' for bloc

The leaders met to prepare for a summit of EU leaders on 28 and 29 June, with Emmanuel Macron keen to push through wide-ranging reforms to strengthen the eurozone.

FILE: French President Emmanuel Macron (L) and German Chancellor Angela Merkel give a joint press conference on 19 June 2018, at the Meseberg Palace, northeastern Germany. Picture: AFP

BERLIN - German Chancellor Angela Merkel and French President Emmanuel Macron agreed on Tuesday to create a eurozone budget charged with boosting investment in the bloc and promoting economic convergence between its 19 states.

The leaders met to prepare for a summit of European Union leaders on 28 and 29 June, with Macron keen to push through wide-ranging reforms to strengthen the eurozone and insulate the single currency union from future crises, while Merkel has been more cautious.

Merkel said eurozone reform was the toughest issue in their talks at her Meseberg retreat outside Berlin, where they also touched on European foreign and defence policy and immigration.

“We are opening a new chapter,” Merkel said after the talks.

“We are working to make sure that the eurozone budget will be used to strengthen investment, also with the aim of strengthening convergence within the eurozone,” she added. “Because we know that an economic and monetary union can only remain intact if economic policies converge.”

While Europe’s economy has picked up and there is no immediate sign of financial stress, many analysts maintain that reforms are needed to protect the single currency.

Merkel, under pressure at home where her conservatives are divided on how to curb migrant arrivals, said she was optimistic her government and parliament would back the eurozone reforms.

“We have a draft for a new eurozone and that is a really good thing, I would say,” she said.

Macron said the new joint eurozone budget agreed would be operational by 2021.

Details of the budget, including its amount and whether it would be financed by national sources or a bloc-wide tax, would be hammered out by ministers before the end of the year, he said.