Local view for "http://purl.org/linkedpolitics/eu/plenary/2001-10-03-Speech-3-182"
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"en.20011003.6.3-182"2
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"Mr President, the debate taking place today on the supposed choice between the Growth and Stability Pact and budgetary expansion seems somewhat bizarre. In fact, we do not have a choice between these two alternatives.
On the one hand, the Growth and Stability Pact is too rigid an instrument, despite offering some opportunities for derogation, because it does not make proper provision for the time-lags between the economic cycles of the various Member States. We have consistently pointed this out. However, the Council has just suggested that it might eventually be possible to make adjustments according to the economic climate, and using a bit of skill and the excuse of the attacks, we can therefore expect the Pact to be more flexible.
On the other hand, budgetary expansion in countries that have suffered the biggest slowdown, like France and Germany, has had three main effects. Firstly, these countries already have significant budgetary deficits. This limits their margin for manoeuvre and has already acted as a stimulus. As is the case with drugs, a greater stimulus is needed to achieve the maximum effect. However, eventually the dose will have to be reduced.
The second effect of this expansion is that the excessive undervaluing of the euro has led to an increase in exports. This is due to the fact that the euro is an artificial currency. This has been unfair on our partners but has boosted internal growth. However, I am not sure that this might not have contributed, to a very small degree, to the slowdown in the United States over recent months.
The third effect of budgetary expansion is the dispersal of cash people have been hoarding, prior to the introduction of euro notes and coins on 1 January next year. No one ever mentions this, but it is nevertheless happening. This laundered money has been reinvested in the economy in very significant amounts. The figures for France total FRF 50 billion this year.
This is already causing revival. Further budgetary expansion would have no purpose. It would only lead to the eventual introduction of new taxes which would make the situation even more difficult in future. The real question we should be asking ourselves is: given the three linked elements necessary for economic revival I have mentioned, why are we not experiencing an economic boom? Apart from the unexpected effects of the attacks in America, which have yet to be firmly established, I think there are two reasons for this.
The first reason is that the economies of Europe are overburdened with many different taxes and rigid regulations. The policies of the Socialist French government, especially the absurdity of the 35-hour working week, made these problems particularly acute in France.
The second reason relates to the perverse effect of the euro. I have said this before, but I will mention it again. The euro may to some extent prevent some fluctuation in internal exchange rates, as supporters of the currency take great pleasure in explaining time and again. However, on the other hand, it imposes a single monetary policy on countries which find themselves in very different situations. This ‘one-size-fits-all’ policy, to quote one economist, is not suited to the present situation of France and Germany. It is having a recessionary effect in these countries. It seems clear that the recessionary effect of standardisation today rather outweighs the benefits of eliminating internal exchange rates. If we consider the situation as a whole, the euro is not protecting us from recession but rather encouraging it. Should we put up with greater budgetary deficits to compensate for the euro? That would be truly paradoxical!
In any case, Mr President, given the direction Europe has taken, we will have to endure several more years of problems and tension before governments recognise this essential truth: all countries fare better if each can benefit from an economic policy suited to its individual requirements."@en1
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