EU Social Affairs Commissioner Warns On Stability And Growth Pact Reform

by Ulrika Lomas, for LawAndTax-News.com, Brussels

15 August 2003

In an interview with German business daily, Handelsblatt this week, EU Social Affairs Commissioner, Anna Diamantopoulou urged caution over reform of the Stability and Growth Pact, arguing that although it may need updating to take into account the difficulties being experienced by countries such as France, Germany, and Italy, any decisions must be made by all EU member states.

'Monetary union was agreed a decade ago. The situation today is completely different,' she told Handelsblatt, continuing: 'The question is whether we leave the pact as it is or decide on modifications.'

However, she added that:

'There is a world of difference between a decision taken by all the EU countries to reform the pact, and unilateral decisions by some governments to jeopardise the pact and so put monetary union and its economy at risk.'

Suggesting that in theory the Stability and Growth Pact is flexible enough to allow countries to stimulate their economies via tax cuts and increase spending if they 'have done their homework', Ms Diamantopoulou observed that:

'If little countries like Greece or Belgium had the problems of France and Germany, it would be very difficult for them to say, 'no we don't accept the rules'.'

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