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Matteo Renzi (right) is calling for greater flexibility, reforms and investment not only in his country but across the EU
As the new EU Commission and reconfigured European Parliament prepare to take on the challenges of the next legislative term, the issue of the EU’s Stability and Growth Pact promises to be one of the early points of contention. And with the Eurogroup and the EcoFin council meeting in Brussels on Monday and Tuesday (07-08.07.2014), it didn’t take long for the discussion to start.
In June, eight socialist EU heads of state met in Paris and called for more flexibility with the pact, which limits public deficits in the eurozone to 3 percent of GDP. The leaders, including French President Francois Hollande and Italian Prime Minster Matteo Renzi, said the pact’s rigid guidelines concerning fiscal stability hamper growth and recovery, and have called for more leeway in order to give struggling EU member states the chance to get back on track.
“It is a mistake to be obsessed only by fiscal stability,” said Renzi, speaking to reporters in Rome last week. “Without stability there is no growth, and without growth there is no stability.”
Renzi has taken the opportunity of Italy’s six-month presidency of the European Union, which began on July 1, to make a push for greater flexibility, reforms and investment not only in his country but across the EU. To encourage that, he plans to introduce a 1,000 day reform programme in Italy in September tackling taxes, the civil service, electoral law and the justice system, among others.
‘Room for flexibility’ – with reforms
Ahead of the Eurogroup meeting in Brussels on Monday (07.07.2014), Michael Noonan, finance minister of Ireland – itself not a stranger to austerity measures – told reporters that some “flexibility in the interest of growth and jobs in Europe would be welcome.”
Eurogroup President Jeroen Dijsselbloem said he believes there is enough flexibility in the pact, both on the corrective side and the preventive arm, pointing out that a number of countries had been given more time to deal with their debt problems over the last few years due to economic circumstances.
However, Dijsselbloem acknowledged that there may be some “room for flexibility” on the preventive side of the pact, provided there was a basis of real economic reforms. But he stressed that the “reforms had to be real, not just promised but delivered, with a real impact on the budget.”
Commenting on the Italian reform programme on Tuesday (08.07.2014), Dijsselbloem said that the plans were very ambitious, adding that growth in Italy and the eurozone as a whole needed to become a lot stronger. He added, though, that flexibility would not be introduced for individual countries, but the eurozone as a group.
‘EU should foster growth’
Gianni Pittella, the new leader of the Socialists and Democrats group in the Parliament, said after his election on July 1 that the “EU must take action to foster growth – while respecting the EU Treaties – and we must use all the flexibility available in the pact and get people back to work.”
On Twitter, he pointed out that Stability and Growth Pact was not currently doing much in the way of promoting growth.
.@giannipittella “the pact was called GROWTH and stability – but frankly at the momoent it is just stability with a bit of austerity”
— S&D Group (@TheProgressives) July 2, 2014
On Tuesday, Jean-Claude Juncker, the official nominee for the presidency of the European Commission, met with the Socialists & Democrats (S&D) group in the Parliament ahead of the plenary vote in Strasbourg next week, where he is expected to be confirmed. Faced with a barrage of questions touching on, among other topics, tax fraud, renewable energy targets, migration and the Russia-Ukraine relationship, Juncker mentioned that there would be a Socialist commissioner in charge of the growth and stability pact dossier.
.@junckereu states at @TheProgressives hearing that there will be a “socialist Commissioner in charge of growth and stability pact dossier”
— S&D Group (@TheProgressives) July 8, 2014
There has been speculation that role could be filled by Pierre Moscovici, France’s former minister of finance. Michel Barnier, the outgoing French EU commissioner for internal market and services and from Juncker’s European Peoples Party (EPP), has also backed investments and growth.
We have recreated the conditions for financial stability. It is now time for investments and growth @bfmbusiness
— Michel Barnier (@MBarnierEU) July 2, 2014
- Author: Martin Kuebler