Ovideo, 15/04/2002 (Agence Europe) - At the Eurogroup meeting on Friday in Oviedo, Pedro Solbes, Commissioner for Economic and Financial Affairs, put forward his ideas for a "code of conduct" on the coordination of economic policies, that he is to develop at the Ecofin Council on 7 May, said Council President Rodrigo Rato. The code of conduct, developed at the request of the Barcelona Summit, only "confirms the practices of recent years (…) by setting out clearer definitions of the aims of economic policies and of instruments", Mr Solbes commented. "We have already had some elements of response concerning the game of economic stabilisers and tax reductions, but we hope there will be greater transparency and consistency", he specified, refusing to go into details. The Commission's ideas, he felt, were given a reserved welcome by the ministers.
Proposals are still premature, the German Minister, Hans Eichel, explained in the Financial Times Deutschland.
The document presented by the Commissioner for Trade began with a balance sheet of existing co-ordination measures: statistics on the Euro zones, analysis of the "policy mix" implemented in the major economic policy guidelines, analysis of the consequences of the ageing population on public finance and a qualitative analysis of public finances in the next Commission report on 'Public Finances in the Economic and Monetary Union - 2002".
The document then outlines indications on "common standards" for conducting economic policy in line with the Barcelona conclusions founded on: 1) Norms for maintaining macro-economic stability, "which naturally include the principle of a balanced budget or surplus". The Commission specified that tax cuts must not distance budgetary balance for long or have a pro-cyclical impact. Measures that lead to increased spending in the short term but which improve budgetary performance in the long-term could be acceptable on the condition that there were a sufficient margin maintained in relation to the deficit fixed at 3% of GDP and that variations are "temporary and limited"; 2) Norms for improving growth potential, which would naturally cover the implementation of structural reforms launched by the Council at Lisbon. In this sense, the composition of expenses and income would make improving medium-term growth potential and employment priorities; 3) Norms for responding to symmetrical economic shocks, given that in cases of asymmetrical shocks, stabilisation elements and adjustment must be provided in national budgetary policies and the healthy functioning of the market. The Commissioner did point out that in exceptional circumstances a budget deficit could exceed 3% of GDP.
The document states that the success of economic co-ordination policies depends on the "quality and rapidity of information", which obliges Member States to provide adequate information on their economic policies or for multilateral monitoring. The Commissioner concludes that the "key programme elements for stability must be discussed before their adoption, to offer a greater margin for adjustment if necessary".