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Economic gloom overshadows euro finance ministers meeting

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(Globalpost/GlobalPost)

Eurozone finance ministers meet Monday against the backdrop of a weak economy and increased political uncertainty after inconclusive polls in Italy, the group's third largest economy.

If there has been some relief as the debt crisis eased in recent months, the political impasse in Italy "will colour the perception of what ministers will be discussing," an EU official told a briefing.

Data Friday showed eurozone unemployment at record highs and consumer demand in the doldrums, meaning the 17 euro nations will be anxious to know what damage has been done to the efforts to cut debt and stabilise public finances.

There will be "a lively debate" on the economic outlook as the budget deficit numbers come in, the official said, with most attention focused on France and whether it will get another year from the EU to put its fiscal books in order.

"The issue will be in the back of many peoples' mind," the official said, stressing that the meeting was unlikely to make any immediate decision on this issue or the rest of the agenda.

A mooted bailout for Cyprus would be left to allow its newly-elected president and ministers see what the position is on the key sticking points -- debt sustainability, privatisation and anti-money laundering measures.

Athens meanwhile has officials from the EU, International Monetary Fund and European Central Bank officials -- the 'Troika' -- reviewing its bailout programme while Ireland and Portugal want adjustments to their rescue loan packages.

Ministers will also look at how the restructuring of Spain's struggling banks is progressing and discuss the criteria to apply from next year when member states can call on the new eurozone back-stop, the European Stability Mechanism, to directly inject money into failing lenders.

They may also want to discuss last week's controversial accord in principle on new bank capital requirements and capping banker bonuses but they will have to wait until Tuesday when their 10 non-euro colleagues join them for a full EU meeting.

Tuesday's gathering of all 27 European Union finance ministers promises to be livelier than usual given the hostile reaction in London to the plan to cap bank bonuses, an additional issue to pit an increasingly eurosceptic Britain against the rest.

Another EU official recognised how important the City of London financial centre is to Britain but with the other 26 member states in favour of the accord, cautioned "we do not know what the British government is ready to accept."

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http://www.globalpost.com/dispatch/news/afp/130303/economic-gloom-overshadows-euro-finance-ministers-meeting