Tag: stability and growth pact

EurActiv sums up press reaction from the UK, France and Germany as the Commission sets out the ground rules in the debate on how to reform the Stability and Growth Pact.

Greater focus on debt and sustainability is a major part of the Commission's drive to achieve a better balance between sustainable growth and sustainable finances.

The German Federal Statistical Office estimates a 42.7 billion euro budgetary deficit for the first six months of this year. This would amount to four per cent of the country's GDP.

The ECJ has annulled the Council's conclusions relating to an excessive deficit procedure against France and Germany. The court ruled that the Council had used the wrong procedures.

By presenting a 7.5bn euro savings package, Italy's new interim Finance Minister, Silvio Berlusconi, has once again managed to stave off an 'excessive deficit early warning'.

Commissioner Almunia has signalled a more flexible approach to the Stability and Growth Pact as Greece joins the growing list of countries flouting the existing rules.

A shift to a more flexible interpretation of the rules plus more focus on the sustainability of public finances, as advocated by French, German and British finance ministers, would put Italy under pressure.

The Commission sees encouraging signs of recovery for the EU economies for 2004 and 2005 in its Spring Economic Forecast, but also points to downside risks.

In a special report by CEPS, its Macroeconomic Policy Group (MPG) focuses on the problems encountered in implementing the excessive deficit procedure foreseen in the Maastricht Treaty along the lines of the Stability and Growth Pact. The Pact has effectively been suspended since EcoFin's 25 November decision not to endorse the Commission's recommendations vis a vis France and Germany.

Upbeat about the Stability Programmes for Germany, Portugal, Belgium and Spain, the Commission is not rushing into any proposals on improving economic governance in the Union.

In a letter to the Irish Presidency, four current EU countries and two new Member States have come out in support of the Stability and Growth Pact as it stands. Rather than changing the pact, the ECB chief Jean-Claude Trichet argues for better implementation.

The commissioner nominee for Estonia, Siim Kallas, comes with solid credentials for the job - a former prime minister and finance minister, he was also responsible for finalising the country's negotiations with the EU.

The Commission is reportedly preparing to issue warnings to France, Britain and Italy for failing to keep a firm grip on their public finances.

Jacques Delors has criticised the Commission's resolution to challenge the EU's finance ministers' decision of 25 November 2003 to suspend the Stability and Growth Pact.

The Commission's controversial move to mount a legal challenge to the Council's Stability Pact decision by a fast-track procedure could lead to a ruling in only six months.

On 13 January, the Commission is expected to launch an unprecedented legal challenge against the EU Member States' recent decision not to sanction France and Germany for breaking the Union's budget rules.

The Commission will decide "in a week's time" whether to challenge the EU finance ministers' recent decision to freeze budget discipline rules for France and Germany.

The Dutch finance minister has dismissed a financial forecast that the Dutch budget deficit would exceed 3 per cent of GDP in 2004 as being "too pessimistic".

Critics warned of grave consequences for the stability of the euro as the EU's finance ministers decided on 25 November to ignore the Commission's call to punish violators of the Stability Pact.

France is expected to push for further delay to a vote on specific EU sanctions when the eurozone finance ministers meet in Brussels on 3 November to discuss Paris' breach of the Stability and Growth Pact.

On 8 October, the Commission declared France in breach of the EU's budget rules, saying Paris had not followed recommendations to curb its "excessive deficit" by the 3 October deadline.

Following new French calls for more flexibility in applying the stability pact, Romano Prodi took a tough stance on the obligation of the eurozone members to stick to the 3 per cent ceiling on budget deficit.

French President Jacques Chirac called on 14 July for the provisional softening of the euro zone's strict budget rules in order to help stimulate growth in the Union's depressed economies.

The euro zone finance ministers expect France to cut public spending or increase taxes to bring its deficit below the EU's 3 per cent of GDP limit by 2004.