Tag: stability and growth pact

After a weekend that saw the euro zone take unprecedented steps to rescue debt-laden members with a €500 billion aid package, the European Commission is proposing a new set of rules to tighten the bloc's fiscal and economic policies and prevent crises in the future.

As eurozone leaders prepare to meet in Brussels tomorrow (7 May) to back a bailout mechanism for debt-laden Greece, the European Commission is considering new policy measures to prevent public debt from exceeding acceptable limits. 

Under a deal struck by eurozone finance ministers on Sunday (2 May), Athens would receive 80 billion euros in bilateral loans in three years spanning until 2012. 30 billion would come from the International Monetary Fund (IMF).

Greece readied severe austerity measures on Thursday (29 April), including a three-year pay freeze in the public sector, in order to secure a multi-billion-euro aid package from the EU and the IMF and avoid debt default.

Greece must agree to tough new austerity measures before it receives any financial aid from the European Union and failure to do so would endanger such support, German Finance Minister Wolfgang Schaeuble told a newspaper.

The European Commission is considering cutting its 50 billion euro annual package of regional aid for countries which repeatedly infringe the EU's budget rulebook in a bid to discourage other member states from following in the footsteps of debt-stricken Greece.

European leaders sent out conflicting signals at the weekend over aid to Greece, with Germany's Angela Merkel urging Athens to solve its debt problems alone and Italy's Silvio Berlusconi strongly backing EU support.

European rules need to change so that countries that repeatedly break the bloc's economic guidelines can be expelled from the euro zone, German Chancellor Angela Merkel said yesterday (17 March).

Finance ministers from the 16-country euro zone agreed on Monday (15 March) to mobilise financial aid for Greece rapidly if needed, but revealed little of how their standby plan for the debt-stricken nation would work.

European Union leaders will lay the groundwork for a financial rescue of Greece at a summit today (11 February) in Brussels, but any support is likely to require a major commitment from Athens to get its economy in order.

The European Commission will endorse today (3 February) a Greek plan to cut its budget deficit below the EU ceiling of 3% of GDP by the end of 2012, saying it was feasible despite risks.

The European Commission has told Hungary, Latvia, Lithuania and Malta they are on track with their programmes to cut budget deficits below the bloc's ceiling.

Europe's economic recovery depends on greater fiscal co-ordination and speaking with a single voice at global economic fora, Olli Rehn, the EU's incoming economic and monetary affairs commissioner, told MEPs at a parliamentary hearing yesterday (11 January).

The European Commission has given its starkest warning yet that member states need to have their exit strategies ready for deployment now, as member states face the double burden of ageing populations and a heady deterioration of government accounts.

The EU yesterday (1 October) laid down a plan for a coordinated exit strategy from expansionary stimulus packages that have propped up Europe’s failing economies, but did not agree a date for its implementation.

The French president drew criticism from European central bankers and finance ministers after he attacked the European Central Bank over its handling of the crisis on international financial markets.

In a rare initiative aimed at defending his economic programme, French President Nicolas Sarkozy will participate in an Economics and Finance (Ecofin) Council today (9 July) in Brussels, feeding speculation that ministers will engage in heated ideological debates on models of economic governance.

Although EU public finances improved dramatically last year, many member states are still failing to use the economic boom to decrease their deficits further, the Commission said this week.

Eurozone growth is at its highest in years, but governments must take advantage of the good times to consolidate public finances and implement structural reforms in order to prepare for an ageing society, warned the Commission in its annual econcomic statement.

The Commission has announced that Cyprus may be the next member state to join the eurozone, the current outlook of which looks promising.

Economic and Monetary Affairs Commissioner Joaquín Almunia said that he was pleased with the progress made, but refused to let France and Germany off the hook.

For the first time in seven years, the EU's biggest economies are all set to meet the 3% deficit criterion of the Stability and Growth Pact, economy and finance ministers have announced. 

Heads of state and government agreed at the March 2005 Summit to revise the EU's Stability and Growth Pact reform. Under the revised rules, member states must still keep their public deficits under a 3% GDP/deficit ratio and their debts under a 60% GDP/debt ratio. 

However, the pact's rules have been made more 'flexible' across a range of areas. For example, member states will avoid an excessive deficit procedure (EDP) if they experience any negative growth at all (previously -2%), can draw on more "relevant factors" to avoid an EDP and will have longer deadlines if they do move into an EDP.

The EU economy will grow stronger in 2006 than in previous years, according to the Commission's spring economic forecast. The boost will be partly due to stockpiling before a major VAT rise in Germany.