Brussels, 21/11/2013 (Agence Europe) - On Friday, the Eurogroup will discuss the opinions sent by the European Commission on the draft budgets for 2014 of 13 member states.
In an address in The Hague on Wednesday 20 November, the head of the Eurogroup, Jeroen Dijsselbloem, commented: “It is the first time we will discuss our policies for the next year before the start of the fiscal year. In my opinion, that provides a real opportunity for the European dialogue to have an impact on the new national budgets. We realised that European governance of fiscal policies means far more than ticking the box of the three per cent deficit target. European economic governance is about accepting that members of the euro area have a clear interest in other member states' economic affairs. And it is about accepting that there is a European interest in your own budget. As in every community, the members must have the courage to confront each other with inconvenient truths”, like structural reforms to be carried out for the stability of the eurozone as a whole.
The Commission has not officially asked any of the countries to change their draft budgets (see EUROPE 10964), but says that three countries, France, the Netherlands and Slovenia, have no room for manoeuvre, and five others, Spain, Italy, Luxembourg, Malta and Finland run the risk of their 2014 budget failing to comply with the stability and growth pact (SGP). In a debate with the European Parliament's economic and monetary affairs committee and employment committee on Thursday 21 November, Euro Commissioner Olli Rehn said that the only countries that meet the SGP are Estonia and Germany. Belgium broadly respects it and may be able to exit the excess deficit proceedings in the spring, but Finland and Italy run the risk of not respecting the pact. He admitted that restoring the normal flow of finance to the real economy was one of the most serious problems, if not the most serious.
Legally speaking, the eurozone nations are not required to abide by the Commission's opinions, but Simon O'Connor, spokesman for Olli Rehn, said on Thursday that the Commission hoped they would take account of them. The Commission will react to the member states' budget for 2014 when it unveils its winter economic forecasts in February 2014, which is when it would request any adjustments that might be needed.
Along with the Eurogroup's reaction to Italy's debt and the Slovenian financial problems, the finance ministers will examine the question of trade surpluses now that the Commission has decided to carry out a detailed assessment of German surpluses (see EUROPE 10962). “Let's be clear on this. We are not criticising Germany's external economic competitiveness or its success on global markets. In fact this is what we want for all member states. But a persistent high surplus also means that Germans are investing a large part of their savings abroad. Germans themselves debate whether they invest enough in their own country”, said Rehn, alluding to the current debate in Germany about the need to invest more at home. Encouraging domestic demand and making the service sector more competitive in Germany would force other member states to up their game and become more competitive to win shares of the big German market, said Rehn, warning that otherwise this would be to the benefit of countries like China. (MB/transl.fl)