Monday

22nd Apr 2019

New letter set to reopen wounds on euro rules

A joint letter signed by the leaders of Spain, the Netherlands, Italy, Portugal, Poland and Estonia has called for the rules underpinning the euro to be maintained.

The letter may reopen old wounds over this issue, as some countries are in favour of reforming the rules - known in EU jargon as the Stability and Growth Pact.

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The leaders write, "The Stability and Growth Pact is an essential element of economic governance in Economic and Monetary Union and a necessary condition to sustained economic growth that we all pursue, and its rules must be applied consistently and in a non-discriminatory basis".

They received backing this afternoon from the President of the ECB, Jean-Claude Trichet.

Speaking before the Economics and Monetary Affairs Committee of the European Parliament today, Mr Trichet said, "The ECB does not see a need to change the treaty as it considers the pact appropriate in its present form", adding that he had a "deep feeling" that the pact was "fundamental" to the euro.

Pact under pressure

The euro rules have been under sustained pressure since EU finance ministers decided to effectively suspend them last November.

The Commission is due to set out some ideas on how to reform the beleaguered pact on Wednesday (18 February), but nothing official will be published until the spring.

Economics and monetary affairs commissioner Pedro Solbes hinted earlier this month that reforms in the pact were possible.

And France and Germany are also thought to want some changes made to the pact. French finance minister Francis Mer recently called for spending on research to be excluded from the deficit calculation.

But both countries have said that a cooling-off period should take place before reforms are discussed because tensions are still running high. It is widely believed that Germany, in particular, is keen to leave discussions until the next Commission has taken office in November.

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