Local view for "http://purl.org/linkedpolitics/eu/plenary/2000-11-15-Speech-3-171"
| Predicate | Value (sorted: default) |
|---|---|
| rdf:type | |
| dcterms:Date | |
| dcterms:Is Part Of | |
| dcterms:Language | |
| lpv:document identification number |
"en.20001115.8.3-171"2
|
| lpv:hasSubsequent | |
| lpv:speaker | |
| lpv:translated text |
"Mr President, the Commission has today adopted three recommendations regarding three Council opinions on the updated stability programmes in Germany, the Netherlands and Finland; these are the first of the 2000-2001 round that have been updated and submitted.
The three countries plan to introduce major tax cuts in 2001 and in subsequent years, which will relieve the tax pressure on labour and stimulate employment and investment; they are therefore positive and necessary provided that the public finances are kept stable. Germany and the Netherlands both foresee a deterioration in their budget positions for the next year as a result of these tax cuts. This issue is particularly important in the case of Germany since it means the gradual reduction of the public deficit will be interrupted. One of our concerns with the German programme is clearly to insist that this dip in the trend must be a one-year exception arising from these tax cuts and must not affect future years. In the case of the Netherlands, the Commission has other concerns, such as the suitability of the policy mix and the risks associated with the fiscal incentive effects of the tax cuts in a situation of strong economic growth, which might lead to the Netherlands economy overheating. Our basic message is, therefore, that the margin for making tax cuts must be counterbalanced by strict public spending controls.
This year, Germany and the Netherlands have gained substantial revenue through the sale of third generation mobile telephony licences. In the case of Germany, for instance, this represents 2.5% of GDP, and in the Netherlands 0.7% of GDP. Both countries have very consistently made proper use of this revenue by using it to reduce the national debt.
Because of this factor and, more importantly, better budgetary positions and stronger economic growth, there will be a clear tendency for the proportions of national debt to fall over the coming years. This year, for instance, Germany hopes to bring this proportion down to the reference level of 60% of GDP, and the Netherlands hopes to bring it even lower than that this year. In the case of Finland, the national debt is already much lower than this target and is falling all the time. These trends in the national debt mean lower interest payments, which will, in turn, help provide the necessary framework for tax cuts, and in some cases for specific increases in public spending.
One of the positive characteristics of the Netherlands programme, as I have said before, is the special attention it gives to the impact of the ageing of the population on the exchequer over the coming years. This is a problem which will also have to be faced to a greater or lesser extent in other Member States, as was emphasised at the latest meetings of Eurogroup and the Ecofin Council. Bearing in mind that costs will increase in the future, certain decisions will soon have to be made in order to contain them and ensure they can be managed in the long term.
Based on its own programme, the Netherlands Government is to make important decisions on the use of its budget margins, and it would be appropriate if it used these resources to bring the national debt down more quickly, which would give it greater margins to face these problems in the future.
The Finnish Government’s ambitious budgetary surplus targets are already motivated to a great extent by this ageing factor that I have mentioned. We also hope that the next updating of the German stability programme will pay more attention to this aspect, taking into account the impact of the pension reform that is now under way.
Lastly, the Commission is delighted by the speed with which Germany, the Netherlands and Finland have presented their updated programmes. In the last two countries, the programmes were adopted at the same time as the budget proposals for the coming year, which in the Commission’s opinion is a more suitable practice than used to happen, when we received these updates after each country’s budget had been presented. This ensures that the annual budget decisions are made within a multiannual strategic framework and gives the Community institutions an up-to-date, overall view of each country’s economic situation based on the most recent data.
The Commission therefore recommends that the remaining Member States that are still preparing their updates should follow this example, not this year, when unfortunately it can no longer happen, but in future years.
These are the basic comments that I wished to make on the three programmes we present today. I am at your disposal for any additional comment, to listen to your opinions and to answer any questions.
As you will remember, the Stability and Growth Pact stipulates close, on-going supervision of the Member States’ budgetary position during the third phase of Economic and Monetary Union. The central elements in this supervision process are the stability programmes, which the Member States in the euro area have to present every year. The countries outside the euro area present their convergence programmes, which to a great extent resemble the stability programmes, although the objectives to be achieved are different.
The stability programmes include the public finance strategies for the medium term. How can they achieve a budgetary position in the medium term that is close to balance or in surplus? The aim of this initiative, as you will remember, is to try to create sufficient margin so that in a crisis situation the government deficit will not exceed the reference budget deficit set at 3% of GDP, which could obviously be reached in a crisis phase. This means we have to make the most of the growth phases of the cycle to bring the position back to balance or a surplus. In their updating of the programmes each year, the Member States include an extra year in the programme, analyse the budget policy implemented during the past year, explain and describe the budget policy measures they have adopted, and also revise their budget forecasts and objectives. This is the second time we have updated these programmes: we did it first in 1999, and now we are doing it again in 2000, thereby including one more year in the programme.
The document presented by a Member State is assessed by the Commission and, on the basis of this assessment, the Council may adopt the recommendation that the Commission presents. In fact, in order to carry out this process, the Economic and Financial Committee first pays special attention to analysing the Commission recommendation and the programmes themselves. In this context, to keep Parliament informed, the Commission considers it indispensable to report to it on the current stage of the proceedings.
Within the regular annual budget assessment procedure, the Commission can also choose to make recommendations of a different kind from those mentioned previously, which may, if appropriate, highlight the non-compliance of certain Member States with the deficit position. As yet, it has not been necessary to use this instrument for coordinating economic policies; so far budgetary compliance has been working as laid down in the Stability and Growth Pact. More and more Member States are reaching balanced or even clearly positive budgetary positions. This has given us a different idea, making us wonder whether this Stability and Growth Pact has run its course, having achieved the quantitative objective of a particular final figure, or whether it is worth introducing other aspects relating to the quality of public finances in future programmes. The Commission has opted for this second possibility; hence, in our annual assessment, we shall now also review other aspects previously not considered in the past: first, the orientation of budget policy in each of the Member States according to the point in the cycle at which it finds itself, that is, whether these kinds of budgetary measures are procyclic or anticyclic in nature and to what extent they help the market situation or create tensions within it.
Secondly, we shall also try to assess to what extent budget cuts and tax cuts are consistent, according to a number of principles which may enable us to adopt a common position on this point.
Thirdly – and this is a very important issue – we shall assess to what extent there is a restructuring of public expenditure to favour growth, production, and thus avoid inflationary tensions in the future.
Finally, we shall assess to what extent the national budgets presented each year are compatible with more ambitious medium-term strategies for public finances. Thus, for instance, problems such as the ageing of the population are becoming increasingly more important. In this respect may I just remind you that the last Ecofin Council asked the Commission to include in the assessment of the stability programmes from next year precisely this long-term aspect of public finances in connection with the ageing of the population. Of the three programmes on which I am about to comment, one of them – the Netherlands programme – already includes an annex with a specific analysis of this particular problem.
I am now going to give a very brief mention of the three programmes that have recently been updated. First of all, the three Member States whose stability programmes have been examined by the Commission today have made highly significant progress towards the restructuring of their public exchequers since 1997, the year in which they made their decisions to join the single currency; in fact, Finland already had a budget surplus in 1998 and the Netherlands in 1999. In their new programmes, which cover up to 2004, Finland proposes to maintain a budget surplus of more than 4% of GDP. The Netherlands will achieve small surpluses, which might be larger depending on economic growth and certain decisions on economic policy that are waiting to be adopted. The case of Germany is different: it will gradually approach an overall balance. However, in all three cases, there is sufficient margin to absorb the effect of fluctuations in the economic cycle; in other words, all three countries will be able to face a crisis situation, if one comes about, without exceeding the 3% budget deficit limit."@en1
|
Named graphs describing this resource:
The resource appears as object in 2 triples