On Thursday, Ireland’s Finance Minister Mr Donohoe was elected to head the finance group, beating Luxembourg counterpart Pierre Gramegna and Spanish Economy Minister Nadia Calvino to the post following two rounds of voting. Confirmation of his appointment was made by incumbent Eurogroup President Mario Centeno, and along with a picture of his replacement, tweeted: “Congratulations to the new Eurogroup President.” Ireland’s Finance Minister will take over from Mr Centeno on July 13 and will serve a two-and-half-year mandate until the end of 2022.
EU economics commissioner Paolo Gentiloni said he was confident Mr Donohoe will play a crucial role “at a time of unprecedented challenges” for the severely under-pressure eurozone.
But support for Mr Donohoe’s appointment as new Eurogroup President has not been so forthcoming from Greece’s former Finance Minister Mr Varoufakis.
He tweeted: “The immediate significance of Paschal Donohoe’s (Irish Finance Minister) elevation to the Presidency of the Eurogroup?
“Death knell to any thoughts of corporate tax harmonisation in the Eurozone and the EU.
“In short, business as usual at a time we cannot afford business as usual.”
During his time as Finance Minister in Ireland, Mr Donohoe rejected demands for bigger tax cuts and spending increases to deliver the country’s first budget surplus in a decade. He is also strongly opposed to a potential EU tax on digital firms.
Following his appointment as Eurogroup President, Mr Donohoe pledged to continue to argue for Ireland’s low corporate tax rate.
Ireland has three corporate tax rates: 12.5 percent on trading income, 25 percent for investment income and a 33 percent rate for capital gains.
He said: “Anybody who voted for me and who voted in the first round and second round, knew what Ireland’s position is on really key issues and they voted for me with knowledge of that.
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“Our national position in relation to this matter continues to be very clear. During the campaign when I was asking for the vote of colleagues – they understood our national position on these matters.
“Every colleague that I engaged with had a national position on issues that mattered to them and that is how the European project works. We have issues that are really vital for Ireland and other colleagues have similar issues.
“What I will do is continue to find a balance between national interest here in Ireland that will not change and try to find an equilibrium that is right for Ireland and Europe.”
Mr Donohoe will have to help steer the eurozone through a historic deep recession triggered by the coronavirus pandemic and enforced lockdowns in member states that have resulted in huge warnings for respective economies.
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The European Commission has predicted the bloc’s economy will plummet by 8.7 percent this year before growing 6.1 percent in 2021 – but that is dependent on the coronavirus pandemic being brought under control.
In an unprecedented move, a number of fiscal requirements have been suspended during the coronavirus pandemic, such as states keep deficits below three percent of gross domestic product and reducing high debt.
Mr Donohoe said: “I am very conscious that as this vote takes place, we do so in the shadows of two different crises, the aftermath of the crisis of the sovereign (debt) and the current challenge and crisis of the pandemic.
“As I begin my tenure as President of the Eurogroup, I am deeply conscious that the citizens of Europe are looking at where their national economies stand and the European economy.
“They have become concerned and fearful about the future of their jobs and their incomes.
“This is a challenge that I understand and members of the Eurogroup understand.
“During my tenure as President, I will be working closely with all members of the Eurogroup to look at how our shared currency can help to respond to these great challenges.
“As great and deep as the challenges are, I am confident that my colleagues in the Eurogroup and in Government have laid the foundations to overcome these challenges and prevail.
“The challenges are great but we will prevail and overcome them.”