Taxpayers Association of Europe

Taxpayers Association: Hands off the European Stability and Growth Pact
Loosening the pact endangers Euro

Due to the current developments, the Taxpayers Association of Europe is asking the countries’ heads of government and the finance ministers to “take their hands off the European Stability and Growth Pact”. In the opinion of President von Hohenhau, the European Stability and Growth Pact should not be loosened, because this would lead to, and entice a further drastic increase of public debt.

Taxpayers Association of Europe believes that whoever has recently spoken of more flexibility concerning the pact, often means nothing else than its loosening. The demand for an alleged flexibility increase concerning the pact is expressed by precisely those countries in Europe that have not been very successful in achieving their tasks regarding the pact’s stability.

The parameters of the Stability and Growth Pact, the way they are designed today, already offer plenty of flexibility, leaving enough leeway to the states- even though all countries should actually be aiming for no new borrowing resp. for surpluses. Alone regarding Germany - at this level of new borrowing - the present Stability and Growth Pact equals a flexibility of approximately 60 billion Euros per year, states the Taxpayers Association of Europe.

Its seeming rigidity results from nothing else than the fact that public authorities have recklessly increased the level of debt over recent years and have thus already reached – resp. have far exceeded – the limit for new borrowing set at of 3% of GDP and the sustainable debt level of 60% of GDP, states the Taxpayers Association of Europe. This fact suffocates and restrains budgetary planning. In the opinion of the Taxpayers Association of Europe the pact’s effectiveness therefore strongly depends on a long-term deficit reduction through savings. Without this profound reduction, it will not be possible to actually use the already given leeway flexibly.

Against this backdrop, one could suspect that the persons in charge are not really interested in an improvement of the regulations and the pact’s strengthening, but in distracting from the neglects concerning the pact’s stability and in a circumvention of sanctions in case of an excessive deficit.

The person now questioning the pact’s flexibility is forgetting that an unconditional commitment to the European Stability and Growth Pact has always been the basic requirement for the acceptance of the European Monetary Union - and thus for the introduction of the Euro. According to the Taxpayers Association of Europe, a loosening of the pact represents a deliberate undermining of the Euro’s acceptance and consequently a danger to the Euro itself!

Brussels/Munich 21.01.05
Rudolf G. Maier, Press officer

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  TAE-Office Brussels, Walter Grupp: Phone:++32/2/7387112

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