Local view for "http://purl.org/linkedpolitics/eu/plenary/2001-10-03-Speech-3-197"
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"en.20011003.6.3-197"2
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"Mr President, Commissioner, the dark clouds of recession are looming in the west, in part due to the piercing of the asset bubble of the US stock market, but further exacerbated by the tragic events of 11 September. The US Federal Reserve has now dropped the federal funds rate to 2.5% – a 39-year low. This is the ninth rate cut this year. The ECB may respond shortly, but almost two years since the euro's launch, there is as yet little enthusiasm for its future role as the major international reserve currency.
This is in part the result of exchange-rate weakness and, in part, because the notes and coins are not yet in circulation, so it cannot yet be heralded as an unqualified success. It remains to be seen if the one-size-fits-all model of interest rates will work in all the countries of the Union, in particular countries like Ireland. These concerns and the added concerns about constitutional implications and loss of sovereignty leave my country, the UK, happy to remain outside for the time being.
Although clearly we all wish the project well, it has frankly confounded many pessimists including our former Prime Minister John Major. Some years ago, the Commission in its McDougal report concluded that central tax-raising powers of at least 7% of GDP would be needed to allow counter-cyclical spending and transfer payments to make a single-currency zone function properly.
This would, of course, have been anathema to Member States, so they decided instead on strict spending, borrowing and inflation limits in Dublin in 1996 as an alternative. Recently, there have been calls to make these Stability and Growth Pact ceilings more flexible. This is unwise in my opinion, as I believe firmly that a prudent approach to public finance and borrowing is a good thing. Furthermore, the British economy is linked to and becoming more convergent with the euro zone, so we all have an incentive to stick to the guidelines and we must not allow the US crisis to be an excuse for new, big government tax-and-spend policies. The Stability Pact includes mechanisms designed to operate in recession and Article 2.1 on the excessive deficit procedure could be used in exceptional circumstances to justify higher military or security spending. But Member States should concentrate on structural reforms, particularly in their labour markets, as the way ahead. Otherwise, we would only have high inflation and massive increases in the mountain of national debt."@en1
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substitute; Committee on the Environment, Public Health and Consumer Policy (1999-07-21--2002-01-14)3
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