EU Summit: Controlling Deficits/Debt
- October 29th, 2010
- Posted by EUEditor
The summit of European Union leaders at Brussels (28-29.10.10) went further, with work put in train at the time of the global financial crisis, to watch and regulate economic and financial management.
The heads of government laid out steps towards a permanent system for managing sovereign debt problems, like the crisis encountered by Greee and Portugal, and some other states, in the last two years.
“The crisis mechanism will only be valid for cases where the stability of the Euro as a whole is under threat”, said the German Chancellor, Angela Merkel.
A move proposed by the Chancellor and her government to penalise member governments that fail to stick with commitments, including suspension of their voting rights, was rejected and left for a future time.
Dick Roche, the EU Minister from Ireland, one of the countries that have been wrestling with major debt, said improving rules to prevent crisis was preferred to the idea of punishment.
“I think we should concentrate on making the arrangements themselves work better … Better to prevent a crisis rather than talking about punishing post-crisisâ€, he said.
The leaders, meeting as the European Council, supported a strengthening of budget discipline, committing the 27 member governments to work by standard rules for deficit levels and debt.
This would involve EU sanctions, which may include fines, in cases where deficits are allowed to bow out.
A communiqué from the European Council affirmed that the monitoring of financial and economic conditions would be kept up, for early management of crisis.
It said:
“In order to address the challenges revealed by the recent financial crisis, a fundamental shift in EU economic governance is required.
“To that end the European Council endorsed the Task Force economic governance.
“Its implementation will … increase fiscal discipline, broaden economic surveillance and deepen coordination.
“The report also sets out the guiding principles for a robust framework for crisis management and stronger institutions.
“Further to its discussions of 16 September the EU Council also exchanged views in relation to the G20 Seoul summit and the Cancun summit on climate change …â€.
On the contest between austerity remedies and the push for growth; coinciding with the European summit, negotiations have begun between the European Parliament and Council over the budget for the European institutions.
The Parliament wants a 1.1% increase in EU spending next year, and the Council, representing member governments, wants less than one-fifth of that amount – some €1.29-billion (A$1.835-billion; xe.com, 29.10.10).
Reference Â
European Council, EC 28-19.10.10, Conclusions, EUCO25/10, COEUR18 CONCL 4. http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/117496.pdf, (29.10.10).
EurActiv.com, Brussels, “EU leaders back ‘limited’ treaty change, budget capâ€, 29.10.10.
http://www.euractiv.com/en/future-eu/eu-leaders-back-limited-treaty-change-budget-cap-news-499297, (29.10.10).