21/03/2005 2:05:46 pm
Scrap the Pact. A new deal about a more flexible Growth and Stability Pact in the EU has been struck. There is still a 3 % deficit ceiling and a 60 % public debt ceiling. But now the number of things that may be called "extraordinary circumstances", that can motivate higher deficits or debts, are many more. The definition is unclear. Now politicians say it will be easier to follow the rules. True, but just because there are so many more things that are allowed to do according to the rules. This is all a direct result of creating a pact of rules which is not in the Treaty or guarded by the principle of unanimous decision-making. When the politicians create rules which they can change when they wish, they will do so when the rules make the situation uncomfortable. I have pointed this out numerous times, not least in the Swedish Euro debate. Having rules like this is a joke. The development surrounding all this has been a farse. It takes the focus away from issues of much greater importance, such as reforms to leave the European Social Model. What actually should be done is to follow the advice from The Economist: Scrap the Pact. If we have a European Monetary Policy, we should have national fiscal policies. In fact, one of the advantages of having a single market and a single currency is the increased competition between national policies. And as long as there is an independent Central Bank and a fundamental clause in the Treaty that no government will be bailed out, the risk that national governments get other countries in trouble is no larger than outside the single currency.
Read more about the deal - >