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Eurogroup fails to land deal on coronavirus economic response  

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Via Financial Times

Italy and the Netherlands are being urged by eurozone leaders to drop their red lines over the bloc’s common response to the coronavirus crisis after a 14-hour meeting broke up without an agreement. 

EU finance ministers failed to break an impasse between Rome and The Hague over the issue of coronabonds and how to construct loans from the bloc’s bailout fund during an all-night teleconference that ended on Wednesday morning. The dispute meant ministers could not agree on a report for EU27 leaders that lays out crisis fighting measures and for a post-pandemic recovery. 

Ministers are due to reconvene on Thursday as they seek to find enough common ground to put forward a set of recommendations for EU leaders to consider this month. 

In comments aimed at Italy and the Netherlands, Olaf Scholz, German finance minister, urged eurozone governments “not to refuse to resolve these difficult financial issues” and support a “good compromise for all citizens”. 

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French finance minister Bruno Le Maire echoed Mr Scholz’s words, saying the sides needed to respond to the extraordinary challenges of the moment with an ambitious agreement. 

The meeting came unstuck over two longstanding disputes between the north and south of the eurozone. Roberto Gualtieri, Italian finance minister demanded an explicit reference to the use of “coronabonds” — jointly issued bonds — as part of the bloc’s agreement on the way forward.

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However, northern European countries, led by Dutch finance minister Wopke Hoekstra, are unwilling to commit to common debt issuance and believe the tools already on the table go far enough in addressing the immediate crisis. Italy also pushed during the night for an overhaul of the European Stability Mechanism’s credit lines to remove all conditions on the loans — something its northern partners were unwilling to agree to.

After the meeting, Mr Hoekstra said it was “too early to agree a total package”. The Netherlands, he said, was resolutely against the idea of jointly issued debt and would insist on countries making use of ESM money carrying out economic reforms. 

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