Local view for "http://purl.org/linkedpolitics/eu/plenary/2010-05-19-Speech-3-295"
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"en.20100519.22.3-295"2
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"Mr President, ladies and gentlemen, the own-initiative report on which we are voting this week is of particular symbolic importance at a time when the markets are unable to assess the risks associated with the economic situation in the euro area.
The Ecofin Council had to start all over again on Monday. Against this background, the amendments which we are tabling are, all in all, very moderate; and we are tabling some new ones too. They argue for flexible implementation of the Stability Pact, so that an unwelcome austerity cure can be avoided. They advocate a public credit rating agency to shield Member States from the diktat of the markets. These are the signals that Parliament must send out. Mr Karas, the time for ideological knee-jerk reactions has passed, as has the time for short-term national electoral moves. Europe needs policies which are motivated by a real desire to strengthen the Union. If you and your group are not up to this task, if you are no longer capable of representing the general interest, you can be sure that our citizens will be able to draw their own conclusions, for the future of the euro area is now at stake.
Having demanded severe budget adjustment policies, they now doubt the capacity of Member Sates to kick-start their growth and, hence, to obtain the tax revenue necessary to pay the interest on their debt. Unfortunately, no risk assessment can be carried out in the deeply uncertain context in which the global economy now finds itself. Such an assessment is all the more important in the European Union, where the production capacity utilisation rate is at an all-time low.
Instead of investing, companies are mothballing machines because, despite the initial signs of recovery at the end of 2009, demand is lacking. Growth would even end up going into reverse if restrictive measures were to nip the recovery in the bud. The first aim of our report was precisely to determine the optimum time for launching policies for emerging from the crisis. We proposed maintaining the support measures until the normal production capacity utilisation rate was restored. We therefore suggested ratifying the principle of anti-cyclical budgetary policies, which were successfully established during the first phase of the crisis in 2008 and 2009, and which are in line with the spirit of the reform of the 2005 Stability Pact.
These policies entail using automatic stabilisers, in other words, in earmarking surpluses from the primary budget for debt repayment at the top of the cycle, and in allowing Member States to borrow the resources necessary for stimulus packages at the bottom of the cycle. We are currently at the bottom of the cycle. Interest rates are definitely under pressure and are threatening the sustainability of the debt. This being the case, the European Central Bank was right to announce that it would buy back some debt to enable Member States to diversify their sources of finance.
Nevertheless, in addition to the fact that this concept of sustainability has never been defined in the economic literature, can the risk premiums demanded by the markets be deemed justifiable? No, if we consider that risk in the mortgage derivatives market, just as in the public-debt market, is impossible to assess. This is why, in our report, we proposed that particular attention be paid to the structural deficit indicator rather than the focus being …
This is why, in our report, we proposed that particular attention be paid to the structural deficit indicator rather than the focus being on the current account deficit, the scale of which is due to the deterioration in the actual budget deficit. This is the result of the crisis, which has weakened growth and concomitant tax revenue. This revenue has also been adversely affected by the lowering of taxes, which did not have the expected impact on supply.
Our report seeks to offer three recommendations combined with some operational indicators. The first is to maintain support measures until the recovery has been consolidated. The second is to monitor the structural deficits, which are still close to equilibrium, despite the deterioration in actual budget deficits, in order to send a reassuring signal to the markets as to the state of public finances. The third is to assess the efficiency of tax expenditure and, in particular, of certain tax reductions which are related to the fall in tax revenue.
Unfortunately, for the liberals and the conservatives in the Committee on Economic and Monetary Affairs, common sense counts for little; the impact of the crisis counts for little; and the fact that the massive debt is also due to the bank bail-out plans counts for little. Only their blind faith in the efficiency of the financial markets counts; only dogmatic compliance with a manifestly out-of-date Stability Pact counts. They do not see any need to create the tools required for economic governance, which is essential in order to strengthen the Union. It is a case of putting Europe on a starvation diet and doggedly trying to meet the criteria in the pact without any guarantee of success and at the risk of destroying the recovery, and too bad for social cohesion. That is the position that they have defended in the Committee on Economic and Monetary Affairs. Since that vote, the economic health of Europe has deteriorated further. The European Central Bank and the Commission have finally come up with monetary and budgetary instruments which should enable us to improve economic governance in the euro area. However, the markets have fallen once again, unsettled as they are by the austerity plans."@en1
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