MNI: EU Summit: EZ Reform Need To Fore As Trade Tensions Mount

--France Macron, Eurogroup Head Call for Urgency On Euro Reform 

--Need For Reform Seen Growing As U.S. Trade Tensions Rise

By David Thomas

     LONDON (MNI) - French President Emmanuel Macron and Eurogroup President

Mario Centeno sounded a note of urgency on the need for euro zone reform Friday,

following an EU summit in Brussels.

     Macron played down the fact that the EU summit conclusions on the topic of

euro deepening looked rather thin and that they made no mention of plans for a

Eurozone Stabilisation Fund, something he has actively promoted in recent

months.

     "It's not about drafting something," Macron told reporters here following

the end of a summit meeting which was heavily distracted by migration. "Everyone

agrees - we need a budget to make progress on convergence, on investment and on

competitiveness".

     EU Commission President Jean-Claude Juncker told a post-summit press

conference there had been "agreement on the main features of the budget

approach."

     "We need a mechanism to withstand asymmetric shocks," he said.

     Bur Eurogroup President and Portuguese Finance Minister Mario Centeno

sounded a note of urgency, tweeting:

     "Today's decisions were a good step, but more is needed. The window of

opportunity to reform the euro is closing. We must act decisively while the wind

is in our favour."

     Centeno told reporters that there was "still have a lot of work to do (on

the budget) and how to finance it."

     --'TRANSFER UNION' RESISTANCE

     There remains significant resistance to building euro zone fiscal capacity.

Netherlands, Austria, Finland and other Baltic states have explicitly stated

their opposition to anything approaching a 'transfer union'.

     Macron echoed that sense of urgency and said the EU should take advantage

of the current relative economic and financial calm to accelerate progress over

the next six months.

     "We want a genuine budget for the euro zone which is based on convergence

and investment," Macron said.

     Rising tensions over EZ growth, financial market turmoil and trade

relations with the U.S. are the main causes of this new sense of urgency on euro

reform, with trade well to the fore.

     Commission chief Juncker said that he would visit U.S. President Donald

Trump in Washington on June 24 to send a message of European unity on its

opposition to the US steel tariffs and to stress its commitment to modernising

the WTO, but he was not optimistic that his visit would bear much fruit.

     Defending his budget plan, Macron said he had taken the floor of the summit

on the topic of a euro zone budget immediately following the intervention by

European Central Bank President Mario Draghi.

     --EUROGROUP IN HOT-SEAT

     Macron said that it would now be up to Eurozone finance ministers to thrash

out further details on how such a budget might work and report back to leaders

at their December summit.

     As expected, EU leaders signed off on steps to move towards the completion

of a European Banking Union and to bolster the capacity of the European

Stability Mechanism to fight economic and financial crises.

     In their statement, EU leaders said Banking Union was on track and called

for work to start on a roadmap towards a European Deposit Scheme. As expected,

the leaders also signed off on a plan to make the European Stability Mechanism

the backstop for the Single Resolution Fund.

     Plans to further bolster the economic crisis fighting powers of the ESM

will also be further elaborated by euro zone finance ministers, with EU leaders

set to agree a timeline for a revamped ESM when they meet again in December.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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