Many MEPs stressed the need for more economic governance and that Europe is not yet out of the financial crisis. "We are now in the second phase of the crisis, characterized by massive public deficits", Sven Giegold (Greens,DE) warned.
Economic governance and monetary policy took centre stage in Thursday's annual debate on the Euro area with ECB president Jean-Claude Trichet and European Commissioner Olli Rehn. MEPs voted three resolutions, on the Euro area and public finances, the work of the ECB in 2008, and the appointment of candidate ECB Vice-President Vitor Constâncio, whom they backed for the post.
In the debate with Trichet and Rehn, many MEPs stressed the need for more economic governance and that Europe is not yet out of the financial crisis. "We are now in the second phase of the crisis, characterised by massive public deficits", Sven Giegold (Greens/EFA, DE) warned, whereas Liem Hoang Ngoc (S&D, FR) criticised Germany "for leading us into a deflationary spiral crisis".
"We have to strengthen the budgetary co-ordination of member states, and in all other economic areas too", said Sophie Auconie (EPP, FR), echoing a general sentiment among MEPs on the need for binding rules and stricter observance of the stability and growth pact rules.
In view of the Greek crisis, rules should be developed to allow the ECB to support Greece more, said Jurgen Klute (GUE/NGL, DE). Ramon Tremosa i Balcells (ALDE, ES) said it would be helpful to talk up the usefulness of the Euro itself. "The Euro is not suffering a crisis. There are some specific fiscal crises, but the Euro is still an envied tool around the world", he said. Other MEPs echoed this.
Kay Swinburne (ECR, UK) said that the very different attitudes to spending and saving in the Eurozone were always going to be an issue for the success of the whole area. Godfrey Bloom (EFD, UK) took a completely different line. "I seem to be living in a parallel reality hearing about the success of the Euro. No, the Euro has not been successful at all", he said
Don't overreact to inflation risks
Parliament's resolution on the work of the ECB questions whether it was aggressive enough in reducing interest rates in response to the financial crisis and stresses that the extra liquidity injected may not have reached small and medium-sized enterprises, but instead have been used by some banks to improve their margins and cover losses. Edward Scicluna (S&D, MT) stressed this point also in the presentation of the resolution whereas Trichet argued exactly the opposite.
On post-crisis measures, the resolution warns the ECB not to overreact to inflation risks, so as not to kill off any green shoots. It also calls for more help for non-Euro member states. Finally, Parliament asks the ECB to present its views on setting up a clearing house for credit default swaps within the Eurozone. In his reply, Trichet said that European central clearing will be essential, and that regulators should be able to investigate suspicious speculative behaviour.
Economic governance and monitoring
The resolution on the Euro area and public finances calls for a revamp of the EMU framework and economic governance within the Eurozone, including binding new commitments between member states. It also suggests that reducing deficits and debt are only part of the solution to current economic imbalances and calls for better scrutiny of statistics of aspiring Eurozone countries. The resolution warns against constraining wages too much in order to reduce deficits, since lower salaries slow down economic growth.
Finally, MEPs adopted a resolution recommending the approval of Vitor Constâncio as ECB Vice-President. His nomination will now be officially approved by the European Council.
© European Parliament
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article