SME Chamber

EESC Plenary discusses recommendations on the EU Financial Crises

 Strong proposals by Vince Farugia-Malta Employers Representative – The European Economic and Social Committee (EESC) Plenary Session held yesterday 8th December in Brussels discussed a number of recommendations that the EESC wanted to highlight, solutions to the current Euro zone financial crises. Speaking in the discussion where select speakers from the three groups at EESC – Group I (Employers), Group II (Employees), Group III (Civil Society). On behalf of the Employers Group, Vincent Farrugia, Malta Employers member raised 7 important points:


1. Immediate implementation of what is already agreed: Vincent Farrugia strongly urged as top priority for action by the EU Council of Ministers for the immediate implementation of all legislative instruments (six pack) on economic governance already agreed to by all member states. He insisted to implement without further delay all agreed initiatives for the recapitalisation of European banks and to take more determinant action on the stabilisation of volatile economies.

2. Enhancing competitiveness and economic growth: It is essential, Vince Farrugia stressed, for national and European competitiveness and economic growth to be enhanced by more specific investment programmes, including the possibility also of bringing forward for implementation essential parts of the Europe 2020 Agenda.

3. Ex-ante review and approval of national budgets: Vince Farrugia insisted that the EESC should come out very strongly in favour of stricter fiscal discipline as Europe cannot afford a repeat of the way the stability and growth procedures where abandoned in the pre-crises period. The EESC should also come out strongly in favour of the adoption of strong fiscal rules, including rules that imposed balanced budget strategies on member states. The balanced budget rule should, as he advised in his report on the Effective Enforcement of Budgetary surveillance in the Euro Area, be implemented in a phased, economic and sustainable manner. Mr Farrugia commented negatively however on any imposition on all MS of any ex-ante review and approval of national budgets by the Commission. He requested the EESC to come strongly against this concept as it infringes upon national sovereignty and erodes the authority of democratically elected Governments. "What the EESC should insist on strongly is that the ex-ante review and approval of national budgets should be adopted only, but strongly, in respect of countries which break the rules, which as a result are risking the financial stability of the whole Euro area", emphasised Vincent Farrugia.

4. Compact in favour of fiscal stability: "Too much loose talk is being stated on the establishment of a fiscal union when actually what most mean and are ready to accept is a compact approved by all member states to impose greater fiscal stability. A fiscal union normally implies a finance authority super-imposed on all member states and with powers to impose taxation at ‘federal level'. It also implies that someone will decide on how these federal taxes will be used. This is not what member states want and it is not in the spirit of the EU Treaties. What we all want is increased fiscal seriousness and the right mechanisms to impose discipline. This can be done through a ‘compact' and not through a ‘fiscal union'" stated Vince Farrugia.

5. European stability mechanism (ESM): The ESM is a flexible and robust institution, specifically geared to address current and future challenges in the financial markets. The EESC should come out very strongly in favour of the earliest entry into force of the ESM.

6. Mutualisation of depths: Mr Farrugia said that "again a lot of stress is being made on the concept of Eurobonds, but no one stresses their implication. The most serious of which is that all the member states of the Euro zone would approve a process of mutualisation of depths, implying that those member states that have been disciplined, have not abused of the Stability and Growth Pact rules and have no problem in raising money at the tight level necessitated by their prudent fiscal policies, will have to be castigated by being undermined by the imposition of depth burdens of those member states who have abandoned prudence and discipline and are therefore suffering from the consequences".

7. Treaties of the EU: Vince Farrugia finally strongly urged the EESC to move publicly against any proposed changes to the EU Treaties. Treaty changes would lead to delays in the action that is urgently needed and would create more divisions than solve. "The last thing that Europe needs at the moment is division rather than unity", stressed VF. He urged that the best way forward is for all the 27 member states working together to produce an agreed solution and agreed implementation mechanisms rather than any Treaty change.

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