Brussels, 08/06/2010 (Agence Europe) - On Monday 7 June, the Eurogroup called for further effort on budgetary consolidation. In a statement on the fiscal policy guidelines for 2011 for eurozone member states, the 16 countries pledge to act on indebtedness, a strategy which is equally applicable to all 27 EU members, as similar conclusions adopted by the Ecofin Council on Tuesday 8 June testify.
In 2009, the average deficit of the euro area worsened by 4.3 percentage points, reaching 6.3% of GDP, while debt increased by 6.3 percentage points to 78.7% of GDP, says the Eurogroup text. “The overall fiscal stance of the euro area will be neutral in 2010” (the support measures which some countries are pursuing being compensated by the consolidation in the majority of others), but “the stance should become clearly restrictive as from 2011 when the recovery is expected to gain momentum”, the text says. Still differentiated, consolidation efforts should also be frontloaded in some member states. “Furthermore, and especially as from 2011, ministers commit to take additional measures, where needed” to achieve their budgetary targets.
More specifically, euro area ministers pledge inter alia to: - slant their fiscal policies towards stabilisation then reduction of debt; - achieve their fiscal targets for 2010 and 2011, if necessary through additional measures; - frontload consolidation based on measures which should be of a permanent nature when necessary; - pursue fiscal consolidation beyond 2011 and attain medium-term objectives (MTOs); - pursue structural reforms, notably in the area of pensions, the labour market, product markets and the services sector.
Spain and Portugal invited to do more. And who else?
“Substantial, deep and courageous” is how Eurogroup President Jean-Claude Juncker, speaking after the meeting, described the budgetary consolidation measures taken by Spain and Portugal, which the Eurogroup examined closely. “It is clear, too, that greater fiscal consolidation will be needed after 2011, and further progress on structural reform,” he added. “We heard very serious commitments from the two countries on taking measures towards this end. They are also working on additional measures if necessary to achieve their objectives for 2011,” he stated, in comments that chimed perfectly with the declaration adopted by the 16 euro area countries. Economic and Monetary Affairs Commissioner Olli Rehn also expects structural measures. “The two countries have already announced or will announce substantial structural reforms. More must be done”, for example, to reform the labour market, he said.
The Commission will carry out an in-depth assessment of the Spanish and Portuguese measures as part of the excessive debt procedure at its meeting next week, on Tuesday 15 June. The efforts being made by 11 other countries will come under scrutiny. (A.B./transl.rt)