Local view for "http://purl.org/linkedpolitics/eu/plenary/2001-10-03-Speech-3-176"
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"en.20011003.6.3-176"2
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"Mr President, on behalf of the Liberal Group, I wish to say that we believe the Stability and Growth Pact is an essential pillar of economic stability in the euro area and in the Union more widely, and should be respected in letter and spirit. We do not recognise the view, apparently emanating from the Socialist Group, that the SGP currently incorporates unnecessarily restrictive fiscal rules.
For the 11 countries whose budgets are in a sustainable position – those which, in other words, can face a normal recession with a fall in tax revenue and continue to respect the 3% limit on budget deficits – there is no need to raise taxes or cut public spending and the automatic stabilisers can and should be allowed to play. Moreover, for many of these countries, this is the first slowdown since the first oil shock in 1973 in which the automatic stabilisers have been able to work fully. Previously, financial market worries have been a serious constraint on governments. So monetary union, the Stability and Growth Pact and fiscal consolidation have given back to Member States a useful policy lever which has been out of the policy box for too long.
For the four euro-area Member States whose budgets are not yet fully compatible with the Stability and Growth Pact – France, Germany, Italy and Portugal – it is wholly reasonable that they should continue the process of putting their underlying budget positions right. This means allowing some effects of the slowdown on the deficit, but certainly not all.
In our joint motion with the PPE-DE Group we urge the proper respect of the SGP. We point out that it would be particularly useful in a year like this one – in which many stability programmes were drafted in expectation of 3% growth, but the out-turn is likely to be less than 2%, as the Commission has said – if there were a commonly agreed measure between the ECB, Ecofin and the Commission of the underlying budget balance, stripping out the impact of the slowdown on taxes and cyclically determined spending and, perhaps, interest rates as well. Such an underlying budget balance would allow better between-years monitoring of the fiscal position, underpinning the discipline of the Stability and Growth Pact and reassuring the financial markets that the fiscal stance is not being eased, even if the nominal deficits are inevitably somewhat larger.
Similarly, such an underlying budget balance would discourage finance ministers from fiscal easing in upturns, merely on account of cyclically buoyant revenue.
I urge us to respect the Stability and Growth Pact and add to its ability to check finance ministers' discipline."@en1
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