By Elinor Blair - 17th January 2005
Attempts to revitalise the eurozone’s beleaguered stability and growth pact will top the agenda as finance ministers meet this week.
German chancellor Gerhard Shroeder has been first to weigh in on the debate ahead of tonight’s meeting of the 12 eurozone finance ministers followed by tomorrow’s meeting of the EU’s 25 finance ministers.
“Strategies for reform must reflect the fact that it is not just a stability pact, but also a growth pact,” he wrote in FT Europe.
“Whether a fiscal policy is ‘right’ and promotes stability and growth equally cannot be measured solely by compliance with the deficit reference value of three per cent of gross domestic product,” he added.
The chancellor proposes changes which would enable eurozone members to regain significant control of their own budgets.
He argues that before the Commission begins a budget deficit enforcement procedure against a country, it should take into account whether social reforms have been implemented, whether growth is falling and whether there are specific national problems.
If such conditions are “largely fulfilled”, then enforcement of the EU’s budget deficit limit of three per cent of GDP should be abandoned.
His words are likely to provoke national finance ministers who are unhappy about ceding control of the economic rules underpinning the euro to prime ministers.
Finance ministers will be looking at options to revitalise the rules to make them more accommodating whilst maintaining a level of budgetary restraint.
European leaders hope to sign an agreement on a remodelled stability and growth pact getting to grips with reviving Europe’s floundering economy at the March EU summit (22-23).
Both EU economic affairs commissioner Joaquin Almunia and commission president Jose Manuel Barroso will be at Tuesday’s meeting.
Discussion on the economic impact of the Asian tsunami and poor countries’ debt relief will also be on the talks’ agenda.
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