Friday

13th Dec 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 20 years of archives. 30-day 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.

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

News in Brief

  1. Slovenia, Croatia ex-leaders highlight jailed Catalans
  2. Italian court tells Facebook to reopen fascist party's account
  3. EU extends sanctions on Russia until mid-2020
  4. UK exit poll gives Johnson majority of 86
  5. Orban: 'financial guarantees' to reach climate neutrality
  6. Merkel hopes EU leaders agree 2050 climate-neutrality
  7. Czech PM: nuclear energy needed for climate neutrality
  8. Hungary: Climate target is burden, EU should help

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Latest News

  1. Huge win for Conservatives in UK election
  2. Behind bars: a visit to an imprisoned Catalan politician
  3. Leaders agree 2050 climate neutrality - without Poland
  4. EU leaders cagey on 'Future of Europe' conference
  5. Pressure mounts to grill Malta's Muscat at EU summit
  6. Revealed: little evidence to justify internal border checks
  7. Europe needs to make mind up on relations with Africa
  8. Leaders face crucial EU summit for climate action

Join EUobserver

Support quality EU news

Join us