Before deciding to include the Fiscal Compact in the EU Treaties… but I would say regardless of such a step, we need to ask ourselves some hard questions.
With our national Parliaments, we must create a discussion, a dialogue, about the real significance of the results obtained, the results claimed, for the fiscal compact.
Have its rules really been instrumental in saving the eurozone? Are they still relevant today in their existing format?
This inter governmental agreement was brokered and signed in a different economic and political context with little public debate and involvement.
By any measure, the outcomes have not been outstanding.
Just consider the latest economic (autumn) forecast of the Commission… with many countries still lagging in terms of debt, deficit and unemployment.
The truth is that it’s not possible to put fiscal policy in a legal straight jacket. Tight rules will be violated as soon as they become too inconvenient.
Moreover the political environment now is very different to what it was when the fiscal compact was crafted.
Today, perhaps because of it, the main democratic challenge to austerity is coming from populism, which has thereby been boosted.
Instead of trying to follow blindly the goal of fiscal consolidation, I think a debate should take place around the Fiscal Compact.
All local and national representatives across the EU should be invited to carry out an assessment of its real impact, not least covering the following points:
– the need for a simplification of its expenditure rules;
– a revision of how the output gap is to be calculated;
– an adjustment of the time horizons for the implementation of structural reform, which are too short at the moment;
– the compatibility of the goals set out in the Fiscal Compact with other criteria adopted by the EU, such as those for Europe 2020;
– how to boost public investments across the EU, for instance, by exempting net public investment from government deficit calculation.
Plenary and Committee Speeches
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