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German crisis 'can't stop' euro reforms: commissioner

© AFP / by Danny KEMP | The EU's euro chief Valdis Dombrovskis said he expects London to remain a financial centre after Brexit

BRUSSELS (AFP) - 

Germany's political crisis "cannot stop our work" and the EU will push ahead with plans to reform the euro after Brexit, the European Commission's euro chief vowed in an interview on Tuesday.

Valdis Dombrovskis, the commission vice president responsible for the single currency, said Brussels would unveil its proposals for the 19-country eurozone as planned on December 6.

The collapse of German Chancellor Angela Merkel's coalition talks has sparked fears that the EU's largest economy will be paralysed just as it hopes to embark on ambitious reforms pushed by French President Emmanuel Macron.

"We cannot stop our work only because there is an election in one country or coalition building, and sometimes it takes time. Therefore, in any case, we are moving ahead with our work," Dombrovskis told AFP at his office in the commission HQ.

The former Latvian prime minister rejected suggestions that the problems in Germany had closed the "window of opportunity" which commission chief Jean-Claude Juncker said was available to reboot the bloc after the Brexit vote.

Merkel has been one of the strongest backers of Macron's plans, which were developed in tandem with Juncker.

"In a union with 28 democracies, or potentially 27 democracies (after Britain leaves in 2019), there are always elections somewhere, and we need to accept this," said Dombrovskis, who oversaw his country's entry into the euro in 2014.

EU sources have told AFP that a meeting of EU leaders on December 15 to discuss the future of the euro is at risk because of Merkel's woes, but Dombrovskis said that was a matter for European Council chief Donald Tusk, who organises summits.

"The European Commission's plans remain on track... we intend to present our package of proposals on the 6th of December," said Dombrovskis, who oversaw his country's entry into the euro in 2014.

Juncker's spokesman said earlier that "Europe will not pause" for Germany.

- Brexit warning -

The European Commission plans, which will be considered by member states, include a "budget line" for the eurozone, which could be used to stabilise countries in case of economic "shocks", Dombrovskis said.

But the money would remain within the overall EU budget, stopping short of a completely separate eurozone budget proposed by France's Macron.

The proposals also include transforming the eurozone's bailout fund into a dedicated European Monetary Fund, with "possibly less role of the IMF" in future rescue packages.

Tusk has said he wants EU leaders to decide on the reforms by June next year, and EU sources said that while the German crisis could lead to "a couple of months" delay in negotiations, that deadline should still be possible.

On Brexit, Dombrovskis warned that there would be an impact on London's status as Europe's financial hub, pointing to the decision a day earlier to move the EU's banking regulator from London to Paris.

"I would expect London to be a financial centre, it's a historical financial centre, but also we see there are certain implications of Brexit," he said.

Dombrovskis confirmed EU negotiator Michel Barnier's warning that Brexit would deprive London's financial services industry of its "passporting" rights to do business unhindered in the bloc.

The Latvian also warned there could be "no overarching equivalence" -- ruling out London's hopes of a single deal to say that Britain adhered to the same financial standards as the EU.

Instead, equivalences would have to be negotiated for individual sectors, he said.

by Danny KEMP

© 2017 AFP