Nov 15 - Euro zone finance ministers applaud Spain and Ireland's plans for exiting their bailout programmes. But as garbage continues to pile up on the streets of strike-hit Madrid, Mel Ralph questions whether the peripheral euro zone states really are making progress towards reform.
Europe's finance ministers gather in Brussels to discuss the banking union, a key factor to Europe's recovery. Although markets aren't expecting much progress...in general the mood among the delegates should be good. With both Ireland and Spain exiting their support programs, on paper it looks as though Europe's cracks are healing. Germany's Finance Minister Wolfgang Schaeuble. (SOUNDBITE) (German) GERMAN FINANCE MINISTER, WOLFGANG SCHAEUBLE, SAYING: As you saw, the Irish government has decided that it will end their program on December 15th, and this shows that our policy to stabilize the euro region was right, the program for Spain will also be ended at the end of the year, Portugal is also on the right track, Greece has made great progress. As Madrid enters its second week of strikes by garbage collectors...the question now is at what cost have the reforms come? Wage cuts, job losses and unemployment means the picture on the ground is far from rosy. National Australia Banks' Tom Vosa says Spain has a way to go yet: (SOUNDBITE) (English) TOM VOSA, NAB GROUP, SAYING: The unit labour cost reduction in Spain has come through mass unemployment. That situation isn't going to change soon. We're still yet to see the big investment capital equipment that would allow Spain maintain its productivity gains whilst hiring more workers. Spain might be escaping the wrath of the markets for now, but France isn't. A credit downgrade from Standard and Poor's indicates Europes rot has reached the core. UBS's Bill O'Neill says France needs to push through with reforms: (SOUNDBITE) (English) BILL O'NEILL, UBS WEALTH MANAGEMENT, SAYING: "France is clearly an issue, structural issue, secular issue around the mix. There's simply too much of an emphasis on taxation." Despite suffering a stubborn unemployment rate, France remains defiant against its critics. French finance minster Pierre Moscovici. (SOUNDBITE) (French) FRENCH FINANCE MINISTER, PIERRE MOSCOVICI, SAYING: "When I compare the French bond yields to Spanish or Irish yields, well they are for sure competitive, because they have always been much lower. So I am really happy that Spain and Ireland have spent a lot of energy to get out of this dramatic situation, but it's a situation we're not in, we have never been in, and we will never be in." Spain's littered streets show troubles in the periphery remain. But economic uncertainty from the likes of France pose a bigger threat. Because it's Europe's economic heavyweights that are big enough to topple the whole system.