London Daily

Focus on the big picture.
Sunday, Sep 14, 2025

Eurozone gains new member and top student

Eurozone gains new member and top student

The currency area’s first new country for eight years pursues fiscally conservative policies.
On January 1, Croatia joins the eurozone, becoming the 20th member of the single-currency bloc — with somewhat awkward timing.

It's not a great moment to be joining the club: the euro slid to parity against the U.S. dollar in July and remains weak despite regaining some ground in recent months. The European Central Bank is on a crusade against inflation, which is causing the economy to slow. A winter recession is now the base-case scenario.

Croatian Finance Minister Marko Primorac is optimistic. "We are certain that the interest rates and the borrowing costs in general will increase in due time," he told POLITICO in an interview. "However, we are certain that the increase for Croatia would be much lower than if we didn't join the eurozone."

There are other benefits, too: Fitch, Moody's and Standard & Poor's all hiked their credit rating for Croatia when Zagreb got the green light from the Commission and eurozone finance ministers in July after fulfilling a set of criteria including price, exchange rate and interest rate stability, as well as budgetary discipline and a ban on monetary financing.

"We also anticipate and expect this to be positively reflected on borrowing costs," Primorac said.

Croatia, the last country to join the EU almost a decade ago, is becoming the eurozone's first new member since the three Baltic nations, Estonia, Latvia and Lithuania, ditched their national currencies in 2011, 2014 and 2015.

The switch has been a long time coming, and Croatians are prepared: The Croatian Kuna has been stable at around €0.13 for months; since September, all prices have been displayed in both currencies; vending machines are being adapted; and new eurocoins are being minted, each with a map of Croatia (€2), a silhouette of a pine marten, or Kuna, the national animal (€1), and electricity inventor Nikola Tesla (for €0.50, €0.20 and €0.10). Starter packs with euro coins are available to those wishing to familiarize themselves with the new currency.

Croatia will also gain a seat at the table of the European Central Bank’s Governing Council, and is in the process of ratifying the European Stability Mechanism treaty, hopefully by January, Primorac said.

"When it comes to the additional shield, which will be there by joining the European Stability Mechanism, we also see this as the additional benefit for the Croatian economy," he said.

If for the country the list of pluses is long, then for the eurozone itself it gets the benefit of gaining a top student. Even though it's a Mediterranean country like Italy and Greece, the bloc's most indebted members, Croatia has held a fiscally conservative policy for years.

Its debt-to-GDP ratio, after ballooning during the COVID-19 pandemic as in all other EU countries, is on a steep downward trajectory, standing at 74.3 percent in the second quarter of this year, compared with 86.3 percent in the same period last year — a 12 percentage-point drop.

"Mediterranean countries tend to be more flexible in this regard," Primorac said. "However, we also have and understand and support the more conservative approach." He added that he expects the debt-to-GDP ratio to fall below 65 percent by 2025.

When it comes to the country's take on the Commission's proposals to revamp fiscal rules, Primorac held back from criticism, instead praising what he called "a good step forward." He added that he understood countries' need to invest more in defense or green projects.
Newsletter

Related Articles

0:00
0:00
Close
French Debt Downgrade Piles Pressure on Macron’s New Prime Minister
US and UK Near Tech, Nuclear and Whisky Deals Ahead of Trump Trip
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
Anesthesiologist Left Operation Mid-Surgery to Have Sex with Nurse
Tens of Thousands of Young Chinese Get Up Every Morning and Go to Work Where They Do Nothing
The New Life of Novak Djokovic
The German Owner of Politico Mathias Döpfner Eyes Further U.S. Media Expansion After Axel Springer Restructuring
Suspect Arrested: Utah Man in Custody for Charlie Kirk’s Fatal Shooting
In a politically motivated trial: Bolsonaro Sentenced to 27 Years for Plotting Coup After 2022 Defeat
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
ChatGPT CEO signals policy to alert authorities over suicidal youth after teen’s death
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
King Charles and Prince Harry Share First In-Person Moment in 19 Months
Starmer Establishes Economic ‘Budget Board’ to Centralise Policy and Rebuild Business Trust
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Brazilian police say ex-President Bolsonaro had planned to flee to Argentina seeking asylum
Trinidad Leader Applauds U.S. Naval Strike and Advocates Forceful Action Against Traffickers
Kim Jong Un Oversees Final Test of New High-Thrust Solid-Fuel Rocket Engine
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Supreme Court temporarily allows Trump to pause billions in foreign aid
Charlie Sheen says his father, Martin Sheen, turned him in to the police: 'The greatest betrayal possible'
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
Pig Heads Left Outside Multiple Paris Mosques in Outrage-Inducing Acts
Nvidia’s ‘Wow’ Factor Is Fading. The AI chip giant used to beat Wall Street expectations for earnings by a substantial margin. That trajectory is coming down to earth.
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
On the Anniversary of Queen Elizabeth’s Death: Prince Harry Returns to Britain
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Murdoch Family Finalises $3.3 Billion Succession Pact, Ensuring Eldest Son’s Leadership
Big Oil Slashes Jobs and Investments Amid Prolonged Low Crude Prices
Court Staff Cover Up Banksy Image of Judge Beating a Protester
Social Media Access Curtailed in Turkey After CHP Calls for Rallies Following Police Blockade of Istanbul Headquarters
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
Elon Musk Poised to Become First Trillionaire Under Ambitious Tesla Pay Plan
France, at an Impasse, Heads Toward Another Government Collapse
Burning the Minister’s House Helped Protesters to Win Justice: Prabowo Fires Finance Minister in Wake of Indonesia Protests
Brazil Braces for Fallout from Bolsonaro Trial by corrupted judge
The Country That Got Too Rich? Public Spending Dominates Norway Election
Nearly 40 Years Later: Nike Changes the Legendary Slogan Just Do It
×