MNI INTERVIEW: Italy Confindustria VP Backs Brexit Trade Deal

By Silvia Marchetti

     LONDON (MNI) - Lisa Ferrarini, vice president at Italy's industrial lobby

Confindustria, called for a speedy conclusion of Brexit negotiations saying that

a "transition" period was necessary for firms to adapt and that it would be best

if the UK remained as close as possible to the common market.

     In an exclusive interview with Market News, Ferrarini, in charge of

European affairs for Italy's largest business group uniting over 150,000 firms,

also backed the rapid completion of the banking union with the common deposit

guarantee scheme implemented and the common market strengthened.

     "In the negotiations over the UK's exit from the European Union, a solution

is needed that reinforces the competitiveness and growth of the entire bloc and

preserves the integrity of the common market's freedom of movement of goods,

services, people and capital, while maintaining at the same time the closest

possible economic relations between the EU and the UK", she said.

     Ferrarini said that in order to address a future trade deal with the UK it

was of paramount importance to speedily bring to an end the first phase of

negotiations and to find a way through the "critical issues" that have caused a

stalemate in talks.

     Italian firms must be prepared for the post-Brexit scenario, she said, "but

to support this we need transition solutions that guarantee certainty of

regulations and allow businesses to adapt to the new future relationship"

between London and Brussels.

     In Ferrarini's view Europe is undergoing a deep "crisis of trust" that is

putting at stake the integration process, topped with global challenges such as

the increasing competition of China and the US.

     Europe's industrial core can play a major role in re-launching the

integration project but it needs to be supported by stronger EU policies focused

on innovation, research, greater investments and a more efficient common market.

     "The common market must be reinforced. It is Europe's strategic asset.

Bureaucratic and regulatory barriers must be simplified and eliminated (where

possible), fragmentation of regulations must be avoided while controls boosted

and sanctions imposed on member states that do not respect the rules", said

Ferrarini.

     Confindustria is sponsoring a package of EU reforms, including the creation

of a common EU budget and a EU Finance Minister, together with its sister

groups, Germany's BDI and France's Medef.

     "We're bringing forth a common agenda with the goal of pursuing a

growth-oriented Europe", said Ferrarini.

     The completion of the banking union remains a top goal, linked to the

creation of a common capital market that could put an end to Europe's weak

credit flows.

     "Bringing to completion the banking union is essential if we want to break

the vicious circle between banks and sovereign debts and preserve the financial

services' common market", she said.

     Despite the resistance of certain member states to more burden-sharing, the

implementation of the banking union's missing third pillar - the common deposit

guarantee scheme to backstop lenders in case of default - is unavoidable and

must be pursued, Ferrarini said.

     Europe's financial sector would benefit from a completed, strong banking

union. Despite progress made in Europe's banking sector since 2009, which

according to Ferrarini has become more "stable and resilient than it was before

the crisis outbreak", a lot still needs to be done to avoid future shocks and

turn economic recovery into structural growth.

     "The (banking) regulatory framework must be coherent in balancing the goals

of financial stability and that of funding to the real economy. Finance remains

a strategic tool to boost growth and competitiveness, that's why the banking

channel is essential and must be revitalised", said Ferrarini.

     Weak credit flows are among the main obstacles to growth, both in Italy and

in the Eurozone, as they continue to hamper investments and firms' innovation,

she said.

     To support the expansion of businesses it is essential to integrate and

widen the EU's capital markets and support small-and-medium (SME) enterprises to

access diversified funding sources, including cross-border capital flows.

     Confindustria has consistently warned that the European Central Bank's

accommodative monetary policy would sooner or later start to unwind and even

though it is crucial to exploit the door of opportunity it now offers, member

states and businesses must prepare to face more restrictive policies in the long

run.

     The ECB's recent decision to slow its asset purchase program scheme had

been predicted by markets and therefore had no negative effect on Italy's

Treasury bonds, according to Italy's industrial group, but the central bank's

new, binding rules on non-performing loans (NPLS) could tighten credit flows in

a critical moment when Italy's economy is growing again.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

[TOPICS: M$B$$$,M$E$$$,M$I$$$,M$X$$$,MC$$$$,MX$$$$,MGB$$$,MGX$$$]