Local view for "http://purl.org/linkedpolitics/eu/plenary/2005-06-08-Speech-3-289"
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"en.20050608.21.3-289"2
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".
Mr President, Commissioner, ladies and gentlemen, the political situation in the European Union is too serious to get lost in legal wrangling over the Stability and Growth Pact. Twenty-five Heads of State or Government have recognised the necessity of applying the Stability and Growth Pact flexibly to allow adjustments to be made to economic cycles. They have adopted the Commission’s proposals without amendment, allowing the renewed pact to come into force quickly.
This House really should not try to be more Catholic than the Pope. We must stop elevating stability to dogma. Stability is necessary. No one can live on credit for ever, not even the Americans. All the same, they do take a more pragmatic approach to fiscal policy, they have both deficits and growth. The euro zone is sinking into stagnation.
Economic policy is not an exact science. A balanced budget is not enough for growth and job creation. The nations of Europe are in revolt because the European Union seems to have no other policy to offer than budget austerity. The EU needs to be jump started, we need to stimulate demand and encourage investment. So-called structural reforms that cut wage earners’ purchasing power will not fill manufacturers’ order books.
The Stability and Growth Pact was invented to prevent the states of the euro zone from having too much recourse to the capital market. Excessive public borrowing would push up interest rates, penalise private investors and be inflationary. The opposite has happened, however. Despite some states’ repeated breaches of the pact’s rules, the euro has become strong, inflation is still low and interest rates are at rock bottom. Moreover, the right seems to think that the Stability and Growth Pact has proved satisfactory despite the failings of a few major countries. The Group of the European People’s Party (Christian Democrats) and European Democrats and the Group of the Alliance of Liberals and Democrats for Europe, for example, adopted an amendment to my report on the broad economic policy guidelines saying: ‘Whereas the Stability and Growth Pact has contributed to maintaining a low level of inflation and historically low levels of interest rates ...’ This statement of faith, which ignores the role of the European Central Bank, apparently means that the breaches of the Stability and Growth Pact are not having the macroeconomic consequences we are hearing about.
Joking apart, however, the truth is that Europe’s economic situation is much better seen from outside. The world’s leading exporter and the biggest market for the rest of the world, the European Union is an economic giant that is still highly competitive. We cannot compete with the Chinese in tee-shirts and jeans, it is true, but our consumers have the benefit of this free boost to their purchasing power.
At the same time, Europe is moving forward in high value-added products. Take the motor industry, for example. While bonds issued by General Motors and Ford have been downgraded to junk bond level, the most recent statistics show that the European industry ranks first in the world for the number of cars produced: 17.2 million in Europe, 14.6 million of them in the Union of the Fifteen. The United States, the home of mass production, made only 4.5 million cars in 2003, and that includes a large number of Japanese cars manufactured there.
I could quote many more examples. My conclusion is clear. We must stop being pessimistic about Europe and bolster European confidence again, especially consumer confidence. The high savings rates in France, Germany and Italy denote an unjustified fear for the future. The conduct of economic policy demands stability, yes, but above all growth and also a psychological campaign to restore confidence. We must therefore send our people a much more optimistic message."@en1
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