20th Jul 2019

Top investment bank slams 'shambolic' euro rules

Top investment bank Morgan Stanley has issued a scathing attack on the Stability and Growth Pact - the rules underpinning the euro.

The bank's latest note on the euro zone economy says, "Europe's fiscal framework is in shambles".

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

"Both the public debate between central bankers and politicians over the reform of the Stability and Growth Pact and the unveiling of the true extent of Greece's fiscal deficits serve to underscore that Euroland's fiscal framework is in serious disarray".

Some central Banks, notably Germany's Bundesbank, rushed to criticise the Commission's proposal to reform the Stability Pact when they were unveiled. The European Central Bank (ECB) has also stressed that the Treaty should remain untouched but that the implementation of the rules could be improved.

And last week saw revelations that the state of Greece's budget deficit was far worse than previously thought - described by Morgan Stanley as "a Greek tragedy".

The note concludes, "All of this again highlights the fact that there is no credible fiscal policy framework in place to prevent countries from running excessive deficits in EMU [Economic and Monetary Union]".

The author of the note, European equity analyst Joachim Fels writes, "I stick to my view that the old Pact is dead and buried, and a credible new one is simply not in sight".

The warning comes as the EU's economics and monetary affairs Commissioner, Joaquin Almunia, prepares to flesh out his ideas to reform the Pact.

Mr Almunia will give a speech entitled, "How to strengthen economic governance" at a workshop in Brussels called "EMU after five years".

The Commission proposed in September to allow more time for countries whose deficits break the three percent ceiling of gross domestic product to whip the debt back into shape.

Brussels also suggested taking more into account the individual economic situation of the country concerned.

Brussels joins attack on Greece for false economic figures

Revelations that Greece's economic data for the past three years were false are causing "real worries to the Commission", it was announced today. But there are no plans to question Athens' participation in the euro zone.

Glossary of key euro pact terms

The language surrounding the EU's Stability and Growth Pact can be highly complex for the uninitiated. Click here for an explanation of the key terms.

Brussels unveils 'more intelligent' euro rules

Proposals to reform the EU's beleaguered economic rules were unveiled on Friday in a bid both to restore confidence in the Stability and Growth Pact and end rows between member states.

EU hesitates to back France over US tariff threat

France has passed a new tax on tech companies that will affect US global giants like Facebook. Donald Trump has threatened retaliatory tariffs over it. The EU commission says it will "coordinate closely with French" on the next steps.


Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  2. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  3. Nordic Council of MinistersNo evidence that social media are harmful to young people
  4. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  5. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  6. Nordic Council of MinistersEducation gets refugees into work
  7. Counter BalanceSign the petition to help reform the EU’s Bank
  8. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  9. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  10. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  11. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  12. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North

Latest News

  1. EU goes on holiday as new UK PM arrives This WEEK
  2. Survey: Half of EU staff 'don't know' ethics rules
  3. Von der Leyen signals soft touch on migrants, rule of law
  4. Timmermans: von der Leyen will be tough on rule of law
  5. Timmermans trolls 'idiot' Brexit negotiators
  6. Rudderless Europe: Will real Germany please stand up?
  7. PiS & Fidesz claim credit for von der Leyen victory
  8. Von der Leyen faces gender battle for commission posts

Join EUobserver

Support quality EU news

Join us