Sacred cows to the slaughter? Are the rules changing in the European economy?

Privatisation, balanced budgets, low public deficits, and free trade have long been the mantra for prudent economic management. Now EU governments are backing record bailouts and stimulus packages for their ailing economies, which could mean record deficits and breaking the rules that govern the euro. Last Wednesday MEPs debated the economy and their message for EU leaders at their summit Thursday. We look back at the debate and ask you: “Are the rules changing?”
Balanced budgets - a thing of the past?
 
In the US the Obama Administration passed a bail-out package to the tune of a cool $787 billion. Nationalisation, lending and bailouts are now all the rage. In Europe the Commission Economic Recovery Plan agreed in December commits EU governments to an immediate €200 billion economic stimulus.
 
There is also speculation that EU leaders will increase the €25 billion emergency fund for Central and Eastern Europe member states who face balance of payments problems when they meet in Brussels on 19-20 March.
 
Last Thursday MEPs passed a resolution expressing concern at “the rapid rise in public debt and budget deficits” and the possibility “that public debts may become an excessive burden for future generations.”
 
The growth and stability pact which governs the euro and the 16 countries who are members says state budget deficits should not be above 3% of GDP, although with bailouts and stimulus packages many countries are likely to fall foul of this rule. The question is, are EU rules on public finance limiting governments' room for manoeuvre?
 
In the debate the leader of the Socialist group Martin Schulz said, “Bankers were bailed out with taxes paid by restaurant waiters, drivers, and airport luggage handlers, and allowing them to carry on as before would be tantamount to ”class warfare from above.“
 
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18.4 million unemployed across Europe
 
The latest figures from Eurostat say that 18.4 million people are unemployed across the Union. One of the messages that the Parliament's President will take to EU leaders on Thursday is for them to come up with real plans to tackle rising unemployment.
 
MEPs have already backed a ”European Employment Initiative“ which suggests steps such as VAT exemptions for labour intensive trades, cheques for household care and subsidies to encourage the hiring of people who are the most vulnerable in society. 
 
During the debate, Liberal leader Graham Watson said, ”recession must not mean inaction. EU Members must commit the cash to counter climate change and to create green‑collar jobs.“ 
  
Free trade at threat?
 
Was the collapse of the WTO Doha trade talks last year an omen about the international free trade system? The economic plan still talks of the need ”to reach an agreement by the end of the year“ although whether that will be possible is another matter. 
 
Early drafts of the US stimulus package earmarking funding for products ”made in the USA“ caused alarm in Europe and French President Sarkozy's warning that French car makers should consider relocating to France sparked a row with the Czech and Slovak governments - where many of the plants and workers are.
 
In the 11 March debate Frenchman Joseph Daul - the current leader of the Parliament's largest group - the centre right EPP-ED bloc - urged ”No to protectionism and a fortress Europe.“
 
The leader of the Europe for the Nations groups Cristiana Muscardini rejected protectionism but wanted to shield small and medium sized enterprises from rising costs and the ”unfair competition that arises beyond our border.“