Stronger European economic governance and tougher rules for the Stability Pact needed

The EMU framework and economic governance within the eurozone need to be revamped. This was one of the main messages to come out of a draft resolution on the euro area and public finances adopted on Tuesday by Parliament's Economic and Monetary Affairs Committee.
The resolution, which the EP adopts annually, covers monetary policy, economic governance and this year also the situation of public finances.

MEPs note the absence of effective mechanisms to prevent the growth of imbalances in the eurozone and ask the Commission to examine ways of preventing future excessive growth of these imbalances and the asymmetric shocks to which they contribute.  It also calls for significant improvement of economic governance in the eurozone, particularly by developing binding commitments between governments.  Moreover, the resolution repeats the Commission's view that a strengthening of macroeconomic surveillance is urgently needed.

On public finances, the resolution calls for greater efforts to be made on fiscal coordination than what is required by the Stability and Growth Pact (SGP), which only covers deficits and debt.  The committee believes these criteria are only some of the causes of economic imbalances and that all factors have to be taken on board.  In addition, the SGP must be applied more rigidly than it has been during periods of growth to make sure the Member States do not overspend.

As a solution to reducing the high cost some Member States are facing with repaying their public debt, the draft resolution proposes the idea of issuing eurobonds.

Addressing the specific situation of Greece, the committee says this case should serve as a lesson when future enlargements of the eurozone are being planned.  It also asks that particular attention be paid to the quality of the statistics of the aspiring eurozone countries.