The European Trade Union Confederation published today its plan for a European Public Treasury.
The ETUC’s proposal would be a way to insure a minimum level of public investment in all Member States. The European Commission has called for a fiscal expansion of up to 0.5% of GDP in 2017 across the euro area on the whole, but this is not compatible with the Stability and Growth pact.
Under a European Treasury, Members States would decide together the global level of public investment needed across the EU. The treasury would pool future public investment spending in Europe and fund it by European treasury securities. Member states would still retain full control over their investments, but funding would come from the European Treasury, in proportion to each Member State’s GDP. They could still increase their level of public investment at their own rate of interest.
Removing public capital expenditure (financed by the Treasury) from public deficits would allow Member States to increase their budget flexibility while respecting the rules of the SGP (revised to take account of current expenditure and national investment financing only). The need for further budget consolidation at national level would be reduced.
The EU ‘Five Presidents’ Report on Completing the Economic and Monetary Union, published in June 2015, proposed a Euro Area Treasury. The ETUC calls for a European Treasury for the whole EU with an opt in process for non-euro Member States.
“It does not make sense to reduce current expenditure to increase public investment,” said Katja Lehto-Komulainen, Deputy General Secretary of the ETUC, “yet Europe’s economy desperately needs more investment. A European Treasury would provide the solution to today’s investment impasse.”