Before the meeting of the Eurogroup and the ECOFIN Council this week, the European Liberal Youth LYMEC calls for a reform of the Stability and Growth Pact. LYMEC President Alexander Plahr states: “The watering down of the Stability and Growth Pact and its constant non-observance by Member States laid the basis for the sovereign debt crisis we are currently experiencing. This behavior is both unsustainable and irresponsible. Part of the problem is that the offenders –the national finance ministers- are the also ones to judge this behavior and to decide on possible sanctions, which of course they never did employ. We therefore need to de-politicize that decision! There needs to be an automatic mechanism in place, enforced by the Commission, that can not be tampered with, so that countries big or small that behave unsolidary have to face the consequences.”
Plahr continues: “Instead of populistically blaming rating agencies and financial markets, we Europeans need to get our house in order. The Stability and Growth Pact needs to be strictened and enforced, including clear and enforceable reporting standards and the goal to work towards budget surpluses. If countries keep on breaking the rules year after year, one might ultimately come to the conclusion that voting rights at the Council could be linked to the fulfilment of our common stability rules.”
LYMEC Bureau member Mireia Huerta Sala adds: “Europe needs fiscal adjustments and profound structural reforms to avoid the deterioration of the euro and create growth prospects again. Governments with uncompetitive economies, such a Greece, Spain, or Portugal must shake up a labour market reform and cut down their big deficits. If the governments do not act rapidly and efficiently, the consequences of this crisis will remain longer than expected.”
