Eurogroup President Paschal Donohue said the possible reelection of President Donald Trump would be a catalyst for the European Union to prepare by making its economy less dependent on the United States.
Ireland's public spending minister said in an interview with Bloomberg Radio that it was up to the American people to choose their next leader, but that the region should be prepared for any eventuality.
“Donald Trump has outlined a very different policy on tariff levels and trade,” Donohue said. “We need to continue to deepen our own economic independence, strengthen our economic performance and our economic strength in Europe, and ensure we are in a stronger position to deal with any changes that may come from the US.”
The comments reinforce those of other EU officials, including European Central Bank President Christine Lagarde, who said earlier this year that the EU should prepare for “tough decisions” if Trump returns to the White House. She has promoted capital market integration as a way to shore up Europe before that happens.
“This is a very serious issue that is likely to develop over the next year,” Donohoe said. “I'm confident that we are in a position to continue to develop our relationship with the United States in a way that is stronger from a European perspective.”
Polls predict the November election will be a close one, with a July Bloomberg News/Morning Consult poll showing Vice President Kamala Harris overtaking Trump's lead in seven battleground states to give Democrats a 48%-47% lead in the statistically tight race.
Donohue, who chairs euro zone finance ministers, also expressed confidence in the ability of debtor countries such as France to keep their budget deficits under control while dealing with political turmoil.
“Of course, for a budget to be passed by the French parliament, there has to be a government in place and there has to be political consensus to implement that budget,” he said. “That work is ongoing and I'm sure it will intensify in the aftermath of the Olympics.”
Donohue acknowledged that investor scrutiny of public finances in the euro zone is intense and will remain intense.
“We all recognise that this is something that financial markets will monitor and react to in terms of borrowing costs,” he said. “And all finance ministers recognise that in itself will be a driver that will enable borrowing to decline gradually and steadily over the next year.”
Donohue also said:
He expects the EU's new capital markets commissioner to outline a “strengthened action plan” on capital markets integration “early next year.”
“I believe there is a majority in the European Parliament that can make that happen, and I am sure that once the new committee is in place in the coming months, we will see signs of a willingness to make that happen.”
Ireland's nominee for EU commissioner-designate Michael McGrath would be an “excellent candidate” to become capital markets commissioner and “a senior role”.
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