​​Austria calls for return to EU fiscal rules

After meeting the Eurozone finance ministers on Monday, Austrian Finance Minister Gernot Blümel called for a swift return to the fiscal rules outlined in the Stability and Growth Pact.

Blümel is especially concerned about the high inflation rate in the Eurozone, which could lead the European Central Bank (ECB) to halt their expansive monetary policy. This, in turn could put additional pressure on EU countries with a high debt burden.

“To ensure that the inflation is not continuing galloping, either interest rates have to be raised or other monetary measures have to be taken as a last resort,” he told the Austrian newspaper der Standard. If such measures were to be taken, some European countries would struggle to reduce their public debts.

While he said that he had “the fullest trust in the policy of the ECB” and its zero-interest-rate policy, he claimed that the opinions of financial markets could be a problem in the future.

“If they are under the impression that a country has exceeded its debt sustainability, this could become a problem,” Blümel emphasised.

However, ECB chief economist Philip Lane reassured that the current “period of inflation” is only temporary and “not a sign of a chronic situation.”

The European Commission launched a consultation on a reform of the stability and growth pact on 19 October. While EU members like France, Italy or Greece are pushing for a more flexible approach, Austria and seven other member states want a return to the strict fiscal rules as soon as possible.

(Oliver Noyan | EURACTIV.de)