EU urges crackdown on debt
By Aoife White |
May 13, 2010, Thursday
|
Print Edition
Print Edition
EUROPEAN Union officials urged a crackdown on widespread government overspending, trying to get a handle on the acute debt crisis that has threatened to sink their shared euro currency.
The proposal yesterday from the EU's executive commission advocated unprecedented scrutiny of countries' spending plans even before they go to parliaments - and serious financial penalties for rule breakers.
That would amount to a deepening of the ties that bind Europe's currency union and would curtail some member nations' power over their own economies in an attempt to keep more reckless spenders like recently bailed-out Greece from dumping their debts on all 16 member countries.
EU Economy Commissioner Olli Rehn said the EU's moves would ensure that national governments' spending plans were "consistent with European objectives." They will also "lead to a substantial deepening and prudent widening of the economic and monetary union," he said.
Heavy government debt loads have raised fears of government default, financial panic and even the breakup of the eurozone - fears calmed for the moment by a 750-billion-euro (US$1 trillion) bailout package announced on Monday by eurozone countries and the International Monetary Fund.
The size of the EU fund initially lifted markets by reassuring them that countries would not default. But economists are saying the mere presence of that backstop for shaky government finances eases the pressure on national politicians to keep debt and deficit within strict limits, and that more available loans will not help if Europe doesn't get a grip on running up debt in the first place.
The EU is now calling for governments to emphasize on cutting their mounting debt.
The proposal yesterday from the EU's executive commission advocated unprecedented scrutiny of countries' spending plans even before they go to parliaments - and serious financial penalties for rule breakers.
That would amount to a deepening of the ties that bind Europe's currency union and would curtail some member nations' power over their own economies in an attempt to keep more reckless spenders like recently bailed-out Greece from dumping their debts on all 16 member countries.
EU Economy Commissioner Olli Rehn said the EU's moves would ensure that national governments' spending plans were "consistent with European objectives." They will also "lead to a substantial deepening and prudent widening of the economic and monetary union," he said.
Heavy government debt loads have raised fears of government default, financial panic and even the breakup of the eurozone - fears calmed for the moment by a 750-billion-euro (US$1 trillion) bailout package announced on Monday by eurozone countries and the International Monetary Fund.
The size of the EU fund initially lifted markets by reassuring them that countries would not default. But economists are saying the mere presence of that backstop for shaky government finances eases the pressure on national politicians to keep debt and deficit within strict limits, and that more available loans will not help if Europe doesn't get a grip on running up debt in the first place.
The EU is now calling for governments to emphasize on cutting their mounting debt.
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