Commission President explains his views on the Stability and Growth Pact

Addressing the European Parliament on 21 October, Commission President Prodi repeated his remarks that a rigid application of the EU’s Stability Pact rules would be “stupid”.

Commission President Romani Prodi has raised some eyebrows in Brussels when he stated in aninterview to French Le Mondeon 17 October 2002 that the strict budget rules of the EU's Stability and Growth Pact were "stupid" (seeEURACTIV 18 October 2002).

Speaking to the plenary session of the European Parliament on 21 October,Mr Prodiexplained that he believed in the Stability and Growth Pact, which had been the "keystone for managing the stability of EMU". He warned on the other hand that it would be "stupid" to apply these budget rules in a rigid and inflexible manner. In view of this argument, he defended the idea (already proposed in the Commission's contribution to the Future EU debate) that the Commission should be given more powers in the field of economic policy making.

TheEconomic & Monetary Affairs Commissioner, Pedro Solbes, stated that he agreed with Mr Prodi's interpretation of the Stability Pact rules. He said that there is sufficient flexibility in the system to take account of loss of revenues during an economic downturn and remarked that, in some cases where certain countries were in danger of breaching the 3% annual deficit limit, this was due to "policy slippages".

Several MEPs criticised Mr Prodi's remarks in Le Monde, but welcomed the fact that the debate on a future review of the Stability and Growth Pact rules was now definitely on the table.

 

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