Fiscal treaty not enough to restart Europe's economy, say MEPs

6 Mar 12
MEPs have attacked the fiscal compact agreed by European leaders this week for failing to do enough to revive Europe’s economy and create jobs

By Nick Mann | 2 February 2012

MEPs have attacked the fiscal compact agreed by European leaders this week for failing to do enough to revive Europe’s economy and create jobs.

They say the agreement punishes countries with high deficits rather than those with high youth unemployment. It also fails to address the need for investment in transport and energy infrastructure.

The Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union was agreed by all European Union members except the UK and the Czech Republic at a meeting of the European Council on Monday.

It will make it a legal requirement for signatories’ budgets to be either in balance or surplus. Countries that deviate from this ‘balanced budget rule’ will be subject to automatic correction of their budget plans.

However, Hannes Swovboda, an Austrian MEP representing the Socialist grouping in the European Parliament, said the treaty was ‘wrong in terms of objective’. Speaking at yesterday’s sitting in Brussels, he asked why the agreement would involve taking punitive measures against countries with high deficits and not those with high youth unemployment.

Lothar Bisky, a German MEP from the European United Left–Nordic Green Left grouping, claimed the compact would exacerbate the financial problems in Europe. Its provisions were ‘unfair, unjust and undemocratic’ he said, and would result in indebted countries ‘losing their fiscal sovereignty’.

He called for a ‘U-turn’ on the plans and a new ‘pact for sustainable growth and employment’.

German Green MEP Rebecca Harms asked where the money promised by the EU for jobs and growth was and called for investment in transport and energy. She claimed the ‘charade of summits’ held on Monday had been ‘pulling the wool’ over EU citizens’ eyes.

Council president Herman Van Rompuy defended the treaty and told MEPs: ‘Over the last two years we have taken difficult sometimes painful measures. This was necessary. We are now starting to see it was worth the effort.’

Van Rompuy acknowledged, however, that financial stability would not be enough to solve the financial crisis. He said the priorities were: to promote growth and create jobs, especially for young people; to help small-and-medium sized businesses get access to support; and to strengthen the European single market.

The fiscal compact treaty is now expected to be signed as a legally binding international agreement at the European Council meeting on March 1 and 2. It will enter into force following ratification by at least 12 eurozone countries, but is open to EU members that are not part of the single currency.

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