Analysis: European Public Finances and Statistics – unreal figures for an uncertain policy

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

This paper by the Thomas More institute in France addresses the issue of budgetary balance and raises doubts over the reliability of the European statistic system.

In this paper, Philippe Saunier, Director of the Institute “Right to Peace and Development”, University of Nice, questions the reliability of statistics provided by the member states on their financial and economic record, ahead of a European Summit meeting on 20 of October.

In the author’s view, “the complicated machinery” of data submission and feedback by the European Central Bank and member states raises doubts as to the reliability of the financial statistics. In particular, the author raises the following issues:

  • What credit could one give to the strict criteria of the stability and growth pact?
  • Why do the Council and the Commission close their eyes on unhealthy economic practices and why don’t they take a stand?
  • Why should the new member states be constrained by rigorous budgetary obligations when the original member states are not?
  • What is the effect on the euro currency? 
  • How could one measure the loss of confidence that this generates?

In response to these challenges, the author proposes two recommendations, one aimed at improving European governance, the other at improving the administration of national budgets:

  • The publication of ‘letters of intent’, inspired by those issued by the International Monetary Fund (IMF) to developing countries confronted with budget difficulties. The letters would contain precise quantitative objectives and a record of the national measures put in place to meet the objectives of the stability and growth pact.
  • The vote and implementation of the budget: Rules could be introduced that would condition government taxes and levies to a reduction of the budget deficit along annual objectives agreed at the beginning of each legislature. Taxpayers could thus compare the performance of political parties during election campaigns.

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