debating progressive politics in Europe and beyond
While everyone looks for signals from the French president François Hollande and from the German chancellor Angela Merkel about how a compromise on the fiscal compact might look like, another important negotiation on the future of Europe is largely ignored: The negotiation between Ms Merkel and the German opposition on the fiscal compact. Little known [...]
There is a key element of the ‘fiscal compact’ being signed up to by most members of the European Union which is unachievable for most of the countries involved and striving to meet that objective will be highly detrimental and doomed to failure. It is the notion of achieving a balanced structural budget (technically a [...]
Some politicians (and economists) pretend that cutting spending and raising taxes will lead to budget balance.[1] The argument is all too familiar in Britain. Indeed, it is the cornerstone of the ‘austerity drive’ and ‘fiscal compact’ that the Euro Area (EA) is currently adopting. In particular, Angela Merkel has promoted the notion that government profligacy [...]
The Swiss Debt Brake as European Export? “The Swiss debt brake is becoming an example for Europe”, ran the headline of the Tagesanzeiger, a Swiss daily newspaper in December 2011. Almost all the EU states had just agreed on tougher rules for government debt. The fact that they used Switzerland as an example is at [...]
When most of the EU states pledged at the end of last year to introduce stricter debt limits, where possible incorporating them into the Constitution, this resulted primarily from an acute sense of panic in the face of the continuing escalation of the Euro crisis. For the first time, even the bonds of hitherto unaffected [...]
The agreement reached at the European Summit on Friday is deeply deeply flawed. It needed to do three main things: avert recession and boost growth in the short run, and unwind competitive balances and permit fiscal consolidation at decent rates of economic growth in the medium and longer run. (See here for a statement of [...]
It seems that, at last, the penny, or rather the euro cent, has dropped. The ECB appears to be willing to intervene in a more substantial way to contain the crisis. It may have decided not to commit suicide after all. Member States, individually and collectively, are, in return, apparently prepared to contemplate the previously [...]
As predicted, the debate about exactly what to write into the proposed constitutional amendment to institute a balanced budget/debt brake requirement in Spain has started and promises to be controversial. Underneath the superficial political agreement on the supposed need for such an amendment, major differences are emerging between the socialists and the conservatives on what [...]
Spain is the first to do Franco-German bidding and announce that it will introduce a debt brake/balanced budget rule into its constitution. There is broad centre-left/centre-right support ensuring its parliamentary passage and, according to the Financial Times, this step is “welcomed by Spain’s European partners as they struggle to restore international confidence in the eurozone”. [...]
In yesterday’s column on the Merkel-Sarkozy economic governance proposals I briefly criticised the idea of writing a debt brake/balanced budget rule into the constitutions of euro area member states. It is a crucial point and the arguments deserve to be set out more clearly. At least four arguments need to be made: consistency with sectoral [...]
In October last year French President Sarkozy and German Chancellor Merkel went for a walk on the beach at Deauville and announced their agreement on the need for, amongst other things, the strengthening of sanctions on backsliding member states, treaty revisions to establish a permanent bail-out fund, and private sector involvement in the costs of [...]
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