Brussels, 23/10/2013 (Agence Europe) - The European Commission will take a “holistic look at the fiscal stance of each country” in the eurozone and the eurozone as a whole, explained the European Commission's spokesman on economic and monetary affairs, Simon O'Connor, on Wednesday 23 October, after the publication of a report by a European Commission expert highlighting that the series of simultaneous budget consolidation measures taken in recent years in the eurozone had made the economic recession in vulnerable countries worse.
O'Connor pointed out that the eurozone had convened a special meeting on 22 November precisely to assess the impact of the member states' draft budgets for 2014, submitted to the Commission in October: “I want to highlight the fact that this is why the Eurogroup will hold the meeting - in order to assess the impact of draft budgets that have been presented, not only on the countries concerned, but on the eurozone as a whole, so the impact of all these measures in an aggregate sense” can be looked at. The economic report by expert Jan in't Veld simply reflects the author's own opinions, said O'Connor. The report notes: “Their current account adjustment could have been supported by simultaneous changes in euro area countries that feature large current account surpluses. Yet, the symmetry of the fiscal adjustments in all euro area countries at the same time has hampered this adjustment, with negative spillovers of consolidations in Germany and other core euro area countries further aggravating growth in deficit countries.”
When asked to comment, O'Connor said that the Commission says that the report raises a number of questions. A preliminary version of the report was put online on Monday but then swiftly withdrawn by the Commission. The challenges for each country are very specific, which is why the Commission recommends different approaches to budget consolidation in each country. It is publicly known that the structural adjustments are having negative impacts on growth in the short-term, said O'Connor, but in the medium-term the efforts are paying off. Secondly, the Commission tends to recommend consolidation that is focussed on reducing public spending rather than increasing taxes, but this had rarely been followed by governments, which want speedy results, and this has probably had an impact on the speed of the recovery, said O'Connor. Finally, the Commission has always argued that, if the two big economies in the eurozone, France and Germany, were to implement the structural reforms recommended by the Commission, then they would be doing a great favour to the eurozone as a whole. Will the Commission ask Germany to relax its fiscal rules? O'Connor said: “We'll look at the budget to assess compliance with EU fiscal rules and the stability and growth pact, to avoid high deficit and debt. That's the mandate that the Commission has in the context of EU fiscal rules, but of course we take a holistic look at the fiscal stance of each country and of the eurozone as a whole”. (EL/transl.fl)