FirstFT: It’s going to be all right in the eurozone


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The eurozone is well placed to ride out market volatility and its economy will grow this year and next, the eurogroup president has said, denying that the currency union faces a crisis akin to the one a decade ago.

Paschal Donohoe, Ireland’s finance minister and chief of the pan-eurozone group of finance ministers, said circumstances were “completely different from the kind of crisis environment” when the bloc was gripped by a spiralling sovereign debt sell-off in the early 2010s.

Since its last debt crisis, the EU has bolstered bank regulation with a pan-European supervisor and crisis-fighting infrastructure for when lenders fail. The European Central Bank also has tools to buy government bonds and lawmakers have created a recovery fund backed by common debt.

Donohoe said the euro area now had “stronger architecture” and “deeper foundations for our common currency”.

Surging inflation and energy supply disruptions caused by Russia’s invasion of Ukraine have sparked fears of a sharp downturn in the region. Italian and Spanish bond yields hit their highest levels for eight years last week as market jitters intensified.

Donohoe’s remarks came as ECB president Christine Lagarde prepares to face questions from MEPs today over the central bank’s recent contrasting messages.

  • Opinion: Markets are singling out Italy as the worst of a bad lot in the eurozone, with high inflation and the prospect of recession. Patrick Jenkins examines why.

Do you agree with Donohoe? Share your thoughts with [email protected] and we may feature your response in an upcoming newsletter. Thanks for reading FirstFT Europe/Africa. Here’s the rest of the day’s news — Jennifer

1. Emmanuel Macron to lose majority in French assembly Initial results showed Macron’s centrist Ensemble alliance would fall well short of an outright majority after a strong showing in legislative elections yesterday by a left-green opposition alliance and a surge from the extreme right.

  • Opinion: The next five years now look very different for the president who was positioned to be EU’s most powerful leader, writes Ben Hall.

2. Germany fires up coal plants Berlin said yesterday that it would pass emergency laws to reopen mothballed coal plants for electricity generation and auction gas supplies to incentivise businesses to curb consumption, indicating the depth of concern over possible energy shortages after Russia cut off exports.

“It is obviously [Vladimir] Putin’s strategy to upset us, to drive prices upwards, and to divide us” — Robert Habeck, Germany’s economic minister

More on the war in Ukraine

  • Food shortages: Moscow’s success in preventing millions of tonnes of crops from leaving Black Sea ports is fuelling a global food crisis.

  • Deforestation: The invasion has caused serious disruption to the timber trade, increasing concerns over illegal logging rising to meet demand.

  • Opinion: Admitting Ukraine to the EU would advance France’s dream of a more assertive bloc, writes Martin Sandbu.

3. CMA chief: UK risks being a ‘rule taker’ on tech regulation Andrea Coscelli said companies were investing to adapt to Brussels’ tech laws, which could make it harder for the UK to diverge because of the “undue cost” on corporates after the government chose not to empower the competition regulator to set codes of conduct for big internet groups.

4. City bosses warn of UK recession this year The FT’s City Network, a forum of more than 50 senior executives, said policymakers faced difficult decisions to mitigate the worst effects of a downturn and raised fears that managers lacked experience in dealing with severe economic shocks.

5. Crypto industry faces fallout after weekend meltdown Crypto investors and executives braced themselves for further pain after bitcoin fell as low as $17,628 on Saturday before rebounding, as an escalating credit crunch in the digital asset industry threatens to engulf many of its biggest actors.

The day ahead

Belgium to return Patrice Lumumba’s remains Belgium will return the relic remains of the Democratic Republic of Congo’s first prime minister, who was assassinated in 1961, at an official ceremony today in Brussels.

A Belgian court has cleared the way for Patrice Lumumba’s tooth, his only remains, to be returned to his family © AP

Global gatherings Commonwealth government heads convene in Rwanda for a biennial meeting that was twice delayed by the pandemic. The EU’s foreign affairs council meets in Luxembourg to discuss relations with Egypt, the Horn of Africa and the war in Ukraine. The executive council of the World Meteorological Organization meets in Geneva.

World Air Transport Summit The International Air Transport Association releases its annual report at its 78th annual meeting in Qatar, attended by chief executives of leading airlines.

Economic data Germany releases its May producer price index and the UK publishes trade figures, Rightmove’s monthly house price index and Office for National Statistics data on house affordability. Jonathan Haskel, professor of economics and author of Restarting the Future: How to Fix the Intangible Economy, speaks at techUK’s Tech Policy Leadership Conference.

What else we’re reading

The deafening silence over Brexit’s economic fallout As the sixth anniversary of the UK vote to leave the EU approaches, economists are starting to quantify the damage caused by Britain’s creation of trade barriers with its biggest market, separating the “Brexit effect” from the damage caused by Covid-19. Their conclusion? The damage is not over yet.

Central banks and markets share a secular awakening As nice words about battling inflation gave way to meaningful policy actions, there was first a realisation that we were transitioning to more challenging financial conditions — and then a second one that there would be no hiding for policymakers, households, companies and markets, writes Mohamed El-Erian.

Citi’s $900mn error complicates Revlon bankruptcy As the US cosmetics group negotiates its restructuring after filing for bankruptcy last week, it still does not know the identity of its main creditors, the consequence of a bizarre mistake in which Citigroup mistakenly used its own money to repay a term loan it administered on behalf of Revlon. Here’s what happened.

Can a boss be funny? Emma Jacobs wonders if climbing the ladder requires the power hungry to take themselves so seriously that it chips away at their funny bone. But there are two leaders who partly progressed due to their comedic skills: Boris Johnson and Volodymyr Zelenskyy.

How to escape innovation’s Great Stagnation With inflation soaring and research productivity dropping, ideas have been getting more expensive to find. Spending more on R&D won’t solve the productivity problem. The answer may lie in accelerating remote collaboration.


Martin Wolf selects his best mid-year economic reads, from Howard Davies’ The Chancellors: Steering the British Economy in Crisis Times to Ben Bernanke’s 21st Century Monetary Policy: The Federal Reserve from the Great Inflation to Covid-19.

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