Local view for "http://purl.org/linkedpolitics/eu/plenary/2003-12-03-Speech-3-069"
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"en.20031203.7.3-069"2
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"Mr President, over the last few months we have seen various developments in the application of the Stability and Growth Pact which have created a serious institutional crisis. These events are clear proof that we need to strengthen economic governance in the Union.
The political agreement established in the Council entails using intergovernmental agreements to manage our currency and establishes a dangerous precedent for the future. The Court of Justice will probably have to clarify whether Member States’ governments have the power to create new procedures which effectively replace existing Community structures established in the Treaty for certain aspects of economic policy.
We must, however, bear in mind the fact that the Council declaration made at the end of the Ecofin Council shows that the Member States understand the need for a growth and stability agreement and also the importance of applying the standards in the same way across the board.
Whatever happens, the Commission will continue to apply the Treaty and the provisions of the Pact. This will allow all Member States to be treated equally and will guarantee healthy public finances in Europe. The Commission will ensure that the procedures are applied appropriately and fairly.
At the same time, we need to strengthen the economic governance of the Union with a view to ensuring that the single market and single currency work well together.
We think that the decisions taken by Ecofin prove that the real problem is the weakness of the current system of economic governance at European level. The Commission intends to tackle this problem and will draw up a programme for better economic governance in the Union after careful thought.
We will not, however, be starting our deliberations from zero. Instead, we will continue along the path taken by the Commission in the past. In line with the Communication of November 2002 on strengthening the coordination of budgetary policies, it seems we need to assess how to combine better discipline and flexibility to ensure greater compliance with the rules. We think that, among other things, greater emphasis should be placed on sustainability and on debt, so as to allow for the particularities of each individual country and to increase symmetry over the course of the whole cycle, in particular by being very strict in boom years.
In this way, the Commission will carry out the multilateral monitoring in a more effective way, using all available means to publicise its opinions on economic and budgetary policy.
We have to look at the budgetary discussions within the wider context of current low growth potential in the European economy. We therefore need to pay more attention to the quality of public finances without compromising long-term stability and sustainability.
This means placing the debate on budgetary policy higher on the agenda within the context of coordinating economic policies, with a more prominent role for the economic policy guidelines and the implementation of those guidelines to ensure that the Economic and Monetary Union works well and that the Lisbon objectives are achieved.
Parliament’s active involvement will be essential to this process.
The difficulties stem from the fact that Germany and France are experiencing serious tax problems which can be summarised as follows: excessive deficits, not only due to cyclical factors; the high deficits could prove harmful in the longer term because they threaten the sustainability of public financing by triggering increased debt levels; in addition, there are negative repercussions for potential growth due to the change in economic prospects.
Against this backdrop and with a view to both countries reducing their deficits, applying the rules laid down in the Treaty, the Council first sent a series of recommendations to Germany and France at the start of the year asking them to adopt measures designed to correct the excessive deficit levels by the end of 2004 at the latest.
In the second half of this year, however, it became clear that the measures adopted by the two countries would not be enough to correct the high deficits in 2004. The Commission therefore implemented the procedures laid down in the Treaty, submitting new recommendations which take the current situation into account.
As you know, a small number of Member States rejected the Commission’s proposals in the Council, and in an unprecedented move, a majority agreement was reached outside the scope of the Treaty.
This agreement, formulated as ‘Council conclusions’, has very wide-reaching implications which go far beyond the simple application of the Pact in France and Germany. The Commission deeply regrets that the Council has followed neither the spirit nor the letter of the Treaty and the Stability and Growth Pact, both of which were unanimously approved. We feel that a rules-based system is the only way to ensure that commitments are respected and to guarantee equal treatment for all Member States.
We have to understand that the Council’s decisions will make it harder to apply the Treaty rigorously. Proceedings for other countries will be affected. It will now be very difficult for the Council to adopt formal decisions in line with the procedure for excessive deficits, including the possibility of sending preventative warnings.
The value of the reports on the stability and convergence programmes could be diminished if the Council does not accept a system of rigorous multilateral monitoring.
It could become harder to apply the convergence criteria strictly in the new Member States, given that the euro-zone countries have been allowed to maintain deficits of over 3% for several years running and the procedures laid down in the Treaty and the Pact have not been applied."@en1
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