Friday

16th Nov 2018

Commissioner reignites scrap over euro rules

EU Trade Commissioner Pascal Lamy has reignited the ongoing scrap over the Stability and Growth Pact - the strict set of laws governing the tax policies of Member States in the Eurozone.

The pact needs to be "modernised and whipped into shape", according to Mr Lamy, who was speaking at the Asia-Europe summit in the Chinese city of Dalian.

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The pact requires the 12 countries that have adopted the euro as their currency to keep their budget deficits - tax revenue minus public spending - below three percent of their Gross Domestic Product (GDP) every year.

But Mr Lamy believes this requirement is "too simplistic to run an economy". He says the EU needs a more "intelligent" pact, which requires Member States to balance their budgets over the medium term - a similar system to that used in Britain.

By calling for reform of the pact, Mr Lamy is siding with his compatriot French President Jacques Chirac, who has also recently called for a relaxation of the rules.

This is unsurprising, since France is set to break the pact for the third year running in 2004 and could face massive fines as a result. Germany is in a similar position.

However, smaller Member States - who tend to have lower deficits - have strongly argued for keeping the pact as it is, saying that the credibility of the rules governing the single currency is at risk if the larger countries do not stick to them. The European Central Bank (ECB) also wants to keep the current framework.

The Trade Commissioner's intervention is likely to stir up the argument once more.

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Just hours before Eurozone finance ministers are set to meet, French President Jacques Chirac has launched an attack on the Stability Pact saying that ways should be found to make it more flexible.

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Italy would be committing economic "suicide" if it fell in line with EU rules, its deputy leader has said, in a sign that Rome has little intention of bowing to pressure ahead of Tuesday's budget deadline.

Greek austerity violated right to health, says watchdog

Cuts in the Greek health care system, following the austerity cuts demanded in return for international bailouts, have violated the European Social Charter on the right to health, says Council of Europe's human rights commissioner, Dunja Mijatovic.

Analysis

Salvini is gambling with core voters' future in budget battle

Businesses in northern Italy are anxiously watching the standoff between the European Commission and the Italian government. They used to be the 'Northern League's' most important electorate - but the party's profile and priorities have changed.

EU commission eyes majority tax rules

The commission plans to address tax avoidance schemes in some EU states by shifting tax decisions away from unanimity to a majority system in what amounts to a long shot.

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