A report adopted by Parliament on Thursday backs a strict application of the Stability and Growth Pact and calls for renewed efforts by Member States to use the current upswing in the economy to prepare public finances for the challenges of the future, notably an ageing population.


The annual own-initiative report on public finances in the Economic and Monetary Union, drawn up by Kurt Lauk (EPP-ED, DE) and adopted by 277 votes in favour to 142 against with 130 abstentions, welcomes the “considerable effort” made by many Member States to meet their Stability Pact obligations, but expresses concern at the implementation of the preventive arm of the pact, notably in those countries which have not balanced their public finances. It says a lenient application of the pact could “pose a serious threat to balanced public finances and employment opportunities.” Violations of the pact “could ultimately undermine the common monetary policy and add tot he pressure to increase interest rates.”

Looking further ahead, Parliament is “alarmed” by the “dramatic increase in age-related expenditure” projected by the Commission and is concerned that six Member States are considered to face a high risk to the long term stability of their public finances, ten a medium risk and only nine a low risk.

MEPs urge that reduction of public debate be accelerated during economic upturns, avoiding pro-cyclical measures, with structural and tax reforms to improve the economic performance of the Member States. They encourage governments to conduct the necessary reforms of the labour market and services sector, and to reduce the administrative burden on business. They call for structural reforms and additional measures permanently to improve the investment climate and boost investment.

Parliament advises the Council to ensure that Member States running an unsustainable public debt make new public debt unlawful or unconstitutional by 2015, thus drawing on the best practices of certain Member States and regions.

MEPs welcome the recent agreement of the Eurogroup jointly to discuss budgetary projection in order to determine in advance the appropriate fiscal strategy for the following year. They say a debate on these projections should take place in the European Parliament with representatives of national parliaments.

The report warns Member States to present statistics “of a high standard” to the Commission, and urges the Commission “to check vigorously the quality of statistics reported” to them, and take penalty measures where necessary to ensure improvements.

Finally, MEPs deplore the lack of policy coordination in the euro zone and draw attention to the divergence in fiscal policies of the zone’s Member States. They are concerned about the possible antagonistic effects of such a lack of cooperation.