The ETUC urges Finance Ministers to reconcile "Maastricht" with “Lisbon”
The ECOFIN Council meets this week to discuss the reform of the Stability Pact. The European trade union confederation (ETUC) urges finance ministers to avoid making the Pact even more rigid and puts forwards clear proposals for a new European fiscal framework that balances the objective of stability with the objective of growth.
Said John Monks, ETUC General Secretary : ‘The paradox is that Europe urgently needs to invest in innovation and the knowledge society while at the same time it is subject to a fiscal policy framework that is a stumbling block for such investments. This schizophrenia has to end and the Stability Pact needs to be put in order so that Maastricht and Lisbon are reconciled’
At the occasion of the ECOFIN meeting this week (16th February Eurogroup, 17th February main ECOFIN Council), the ETUC sets out proposals how to transform the Stability Pact into a European fiscal policy framework that works for stability as well as economic growth.
The ETUC proposes :
to take the national situation more into account when applying the Pact by using criteria to assess whether the country’s economy is overheating or undercooling ( high or excessive low inflation rate, high private sector and total net savings,...)
to qualify the present gap in innovation as an ‘exceptional circumstance’, warranting a temporary deviation from the current rules of the Stability Pact;
to use this temporary margin to introduce a ‘Growth Initiative’ with a real impact. Member states should be invited to introduce ‘national plans for recovery and innovation’ that provide additional investment in research, education, eco-innovation and renewable energy;
to make fiscal discipline ‘bite’ in the upturn. Once the economy is in ‘lift - off’ mode, then ambitious fiscal consolidation should be pursued by for example setting reserves aside in the form of Stability Funds.
While supporting the principle of sustainable public finances, the ETUC urges Finance Ministers to be careful when introducing a bigger role for public debts and pension liabilities in the new Pact. Countries also need to grow out of their deficits and debts and this will not be possible if the new Stability Pact is made even more rigid than the existing one.
Was this article interesting and relevant for you? Do you have any comments?
You can post a reply to this article here.