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Chiracâs budget plea creates EU storm
Franceâs call to ease the eurozoneâs strict budget rules has created an uproar at the meeting of eurozone finance ministers in Brussels. In his traditional Bastille Day interview, President Jacques Chirac called for a softening of the so-called Stability and Growth Pact which aims to keep public debt levels in check and maintain confidence in the euro. "This is July 14, the day the Bastille was stormed, and now itâs the day the stability pact has been stormed," said Dutch Finance Minister Gerrit Zalm angrily going into the meeting. "The storming of the Bastille was a better idea." Indeed. Which brave revolutionaries were turned loose? Four fraudsters, a couple of lunatics and a young noble. "We have no room for softening the pact, not even temporarily," said Finnish finance minister Antii Kalliomaki. "We shouldnât even be discussing this - itâs one of the pillars of our economic policy and the single currency," said Austriaâs economy minister Karl-Heinz Grasser. The row over the stability pact has been raging for months, reaching a climax when the president of the European Commission called the rules "stupid" and then backtracked furiously. Real world economics must be oh-so-tiresome for a left-wing Poo-bah like Prodi. The rules - which dictate that a budget deficit cannot exceed more than 3% of national economic output - were designed to help regulate the economies of the 12 nations that use the euro. But, with Germany and France in particular suffering from an economic slowdown, these countries have already exceeded the limit in order to stimulate growth. France, the eurozoneâs second biggest economy, had a public deficit of 3.1% in 2002 and the European Commissionâs provisional forecasts see it rising to 3.7% this year and 3.6% in 2004. Germany, meanwhile, has just initiated hefty tax cuts in order to spur growth, but insists it can still keep its deficit below 3%. "Stability is not the priority right now," said German Finance Minister Hans Eichel, "we need growth." But he stopped short of echoing President Chiracâs call for a relaxing of the rules, saying the finance ministers knew how to apply the rules in a "reasonable and coordinated way". Prior to Mr Chiracâs comments, the ministers had been hoping to avoid discussing the controversial pact again, leaving it for the autumn agenda. Then ministers will have an even tougher decision to make - whether to impose hefty fines on those countries who continue to offend. And theyâd expect the French to pay? Posted by: Bulldog 2003-07-15 |
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