The financial sector needs a shake up but EU financial ministers are not in agreement about the time scale and the extent of the reforms, Dutch finance minister and eurogroup chairman Jeroen Dijsselbloem tells the Volkskrant in an interview.

According to Dijsselbloem, who chaired an informal meeting with his European colleagues on the future of European banking in Vilnius last weekend, banking reform is still ‘a matter of the highest urgency’, the paper writes.

The Dutch finance minister said signs of economic recovery won’t affect bank reform but could slow down the willingness of politicians to press on with cutbacks. ‘There’s a tendency among citizens and politicians to say: aren’t we being too harsh and too precipitate? I think this is an incredibly risky development. Economic growth is very tentative and vulnerable and such an approach would kill it off.’

Weariness

Dijsselbloem noted a ‘cutback and reform weariness’ in most of his colleagues but remains firmly on message: as long as spending on unemployment benefits, healthcare and care for the elderly continues to rise, cutbacks will be inevitable.

The Volkskrant comments that Dijsselbloem himself turned EU commissioner Olli Rehn’s ‘minimal’ €6bn mandate into the ‘maximum’ amount the Netherlands is prepared to economise. ‘I told Rehn I would manage the six billion but that if anything unexpected were to happen I wasn’t prepared to hike the amount up to eight or ten billion. It would play havoc with the measures already set out. It would cause political drama, and an inconsistent and chaotic budget making process.’

Dijsselbloem also said Rehn would accept a deficit that would exceed the stability pact norm of 3%, although he does not think it will come to that.

New condition

An attempt by Dijsselbloem to introduce a new condition to the pact – to couple the one or two-year breathing space for countries which fail to reach the 3% norm to a pledge to carry out major reforms – has not been greeted with great enthusiasm by the other European member states, although, Dijsselbloem says, the European Commission is ‘interested’, the paper writes