EUROPE – Population ageing is now on the agenda being set by the European Commission as it puts forward plans to revamp the Stability and Growth Pact which underpins the single currency.
“Budgetary surveillance should ensure the achievement of surpluses in good times to prepare for the ageing of the population, to create sufficient room for dealing with economic slowdowns and to ensure an adequate policy mix over the cycle,” the Commission said in a statement.
The Commission said the pact – whose conditions have been breached by member states – “would benefit from an increased focus on the sustainability of public finances and increased recognition of the different economic situations in an enlarged Union of 25”.
It called for “better interlinking the instruments for EU economic governance in order to enhance the contribution of budgetary policy to economic growth”.
“It is my firm belief that these proposals will provide for a stronger and more credible pact,” said outgoing Commission president Romano Prodi.
He added in a news conference: “The proposals present a credible compromise between economic soundness and the political realism. Between simplicity and clarity of rules and the need for discretion to adapt to a complex world. Between sustainable growth and sustainable public finances.”
“The Commission intends to push forward this debate in an open and transparent manner and in close cooperation with member states,” said economic and monetary affairs commissioner Joaquín Almunia.
“Our proposals introduce more economic rationale in the implementation of the Stability and Growth Pact while strengthening surveillance and enforcement. They aim to support macroeconomic stability, ensure sustainable public finances and contribute to the improvement of the EU’s growth potential and the realisation of the Lisbon agenda.”
The Commission was responding to the European Council, which in June called for proposals to “strengthen and clarify” the pact.
Among the proposals is the possible loosening of some elements of the pact. And economic developments should be taken account of when budgetary deadlines are set.
But the Commission also called for earlier action to head off poor budget policies and tightening up monitoring of debt reduction.
The new head of the European Parliament’s Economic and Monetary Affairs Committee, Pervenche Berès, was cool on the announcement – saying it “lacks enough detail and concrete proposals”.
“The proposals deserve close scrutiny and analysis, and our Committee intends to do just that in the coming weeks. Nevertheless, there seems to be a sense of urgency to the Commission’s communication.
“I wonder whether this sort of short-term reaction to the current fiscal difficulties faced by some Member States is what we need, given that Europe requires long-term stable solutions and not just a ‘quick-fix’ approach.”