Solbes issues harsh pension warning to member states
By Honor Mahony
A pension time-bomb is waiting for the member states unless they get their public finances in order, was the stark warning by monetary affairs Commissioner Pedro Solbes today Wednesday, 21 May.
Demographics are "putting pressure" for action, said Mr Solbes who added that "there is only a limited window of opportunity for countries to get their public finances in order before the budgetary impact of ageing takes hold as of 2010".
Join EUobserver today
Get the EU news that really matters
Instant access to all articles — and 20 years of archives. 14-day free trial.
Choose your plan
... or subscribe as a group
Already a member?
The monetary affairs commissioner said that the problems can be traced back to the failure of member states to carry out consolidation of public finances in 1999 and 2000.
An analysis of public finances carried out by the Commission states that "there is a risk of unsustainable public finances in some half of EU countries".
Belgium, Germany, Greece, Spain, France, Italy, Austria and Portugal are on this black list.
Of these, Spain and Greece are the worst, with Madrid expected to increase its spending on pensions by 8% of GDP between 2000 and 2040 and Athens by 12% in the same period.
Those on the good list, with sound public finances are Denmark, Luxembourg, the Netherlands, Sweden and the UK.
Bleak outlook for stability pact
The same report paints a bleak picture of the rules underpinning the euro - the growth and stability pact. By the end of 2002 it notes, "only six EU countries, including four euro-area countries had achieved budget positions in both nominal and cyclically-adjusted terms that respected the 'close to balance or in surplus' requirement of the Stability and Growth pact."
He urged Germany, simultaneously Europe's biggest and sickest economy, to urgently carry out structural reforms to boost its ailing economy - and said that the Commission "will continue to monitor Germany."
He was quite definite about the recent French and German idea of military investment to be discounted from the state's budget deficit figures.
He noted that if defence spending is "not funded by the public budget; then that's fine."