MNI SOURCES: Macron To Renew Eurozone Fiscal Stabiliser Push

By David Thomas

     BRUSSELS (MNI) - French President Emmanuel Macron and southern European

allies are likely to make another push for additional money for the eurozone's

new structural reform fund after the European's multi-annual budget is agreed

next year, in the hope of eventually making it big enough to provide meaningful

fiscal stimulus during downturns, sources told MNI.

     For the moment, opposition from the likes of Germany, Netherlands and

others looks like keeping the size of the Budgetary Instrument for

Competitiveness and Convergence to E17 billion. Macron had initially hoped the

instrument would be worth several percentage points of eurozone GDP, big enough

to respond to economic shocks, but in its current likely shape, it will simply

provide funds for economic reform and investment.

     "It's not big, we all know that. It's not a stabilisation instrument," one

source said, "The French view is, we've had some success. Let's do this as a

first step."

     Euro finance ministers agreed the BICC's main features in early November.

Officials say that they cannot rule out Macron's taking a more direct stand on

the topic at the EU's December summit but that it is more likely he will bide

his time.

     --EXTERNAL FINANCING

     Negotiations on the EU's next Multiannual Financial Framework will start

next year, and it could be once these have concluded that Macron and his allies

make another push for an Inter-Governmental Agreement on new external sources of

funding for the BICC, rather than seeking to squeeze more out of an

already-strained EU budget.

     Possible sources of funding might include a eurozone financial transaction

tax or additional contributions from eurozone member states, said an official,

adding that it was too early to speculate how much money might be involved.

     Macron and his euro periphery allies believe events will provide a tail

wind.

     "Crises will undoubtedly reoccur and whenever stabilisation is needed it

will come up again," the source said.

     And when it does, some officials believe German Finance Minister Olaf

Scholz's proposal for a eurozone-wide unemployment insurance scheme could also

find wide support.

     The heightened pessimism on the economic outlook emphasised by the

Commission in its Autumn Fiscal Package on Wednesday, as it seeks to persuade

Germany and other euro states with fiscal space to adopt more stimulative budget

policies, shows that the debate on a meaningful euro zone fiscal capacity is not

going away.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: M$X$$$,MC$$$$,MT$$$$,MX$$$$,M$$EC$,MFX$$$,MGX$$$]