The divergences between Italy and Germany span a broad spectrum of crucial issues related to the governance and future development of the Eurozone and the European Union – from the banking union to current-account imbalances, from the Union-wide fiscal stance to the size of the EU’s budget. Behind these divergences lies a lack of mutual trust and shared vision for the whole EU. If the two countries fail to act together to achieve a more integrated and resilient Union, the risks for the sustainability of the European project are real. The current positive economic juncture is an occasion not to be missed for both EU members – for Italy to reform, for Germany to finally start embracing its role as a leader and acting accordingly.
Paper prepared by the Istituto Affari Internazionali (IAI) on behalf of the Friedrich Ebert Foundation-Rome Office, February 2018. See also: Was Italien sich von Deutschland wünscht. Ein wagemutiges Deutschland für ein wagemutiges Europa, Berlino, Friedrich-Ebert-Stiftung, February 2018, 7 p. (Politik für Europa #2017 plus), ISBN 978-3-96250-059-7.
1. Rules versus flexibility
1.1 The “house in order” approach: Necessary, but also sufficient?
1.2 A concrete example: The German current-account surplus
2. The EU budget and the EU Minister of Finance: Towards a fiscal union?
3. Completing the banking union: Risk reduction and risk sharing