Mitchell, B. (2014) “Eurozone battle lines being drawn again with Germany on the other side“, Bill Mitchell Blog: Modern Monetary Theory – Macroeconomic Reality, 27 Οκτωβρίου.
The battlelines between the European Commission and France and Italy over the – Corrective arm – of the Stability and Growth Pact are firming up after the Italian Government publicly released a ‘strictly confidential’ letter from the Vice President of the European Commission – La lettera della Commissione Europea all’Italia – on the Home Page of the Ministry of Economy and Finance late last week. The European Commission expressed hostility towards the Italian government hinting that there was a lack of trust involved. Nothing could be further from the truth. The fact is that the Commission wants to keep its dirty work away from the public eye because it knows that deliberately creating unemployment and poverty is not exactly an endorsement for its common currency model. But this little skirmish last week between the technocrats and the Italian government is just part of a war that is to come over the implementation of the Excessive Deficit Procedure in both France and soon, Italy. We have been here before – 2002-03 – but this time, Germany was in the trenches with France. Now it is playing the role of the enforcer. It all goes to show however, if we ever needed reminding what a sorry, failed enterprise the Eurozone actually is.
The letter was published under the heading “Highlights” (“In Evidenza”) and the summary notes that:
In light of the Italian plan, which provides for the temporary deviation from the path of achieving the medium-term objective (MTO), the Commission has asked Italy for additional information that more clearly outlines the reasons and the assumptions.
(“Alla luce del piano italiano, che prevede la deviazione temporanea dal percorso di raggiungimento dell’obiettivo di medio termine (MTO), la Commissione ha chiesto all’Italia informazioni aggiuntive che ne chiariscano le ragioni e i presupposti”)
Recall that the so-called Excessive Deficit Procedure (EDP) is a technical process and is triggered if a Member State has either:
- “breached or being in risk of breaching the deficit threshold of 3% of GDP or”
- “violated the debt rule by having a government debt level above 60% of GDP, which is not diminishing at a satisfactory pace. This means that the gap between a country’s debt level and the 60% reference needs to be reduced by 1/20th annually (on average over three years).”
Σχετικές αναρτήσεις:
- Mitchell, B. (2014) “The German experiment has failed“, Mainly Macro Blog, 07 Οκτωβρίου.
- The European Magazine: Conversations, Interview with Philippe Legrain, “Germany is undermining future growth”, 20 Σεπτεμβρίου 2014.
- Daveri, F. (2014) “The German surplus and the Eurosceptics“, VoxEU Organisation, 28 Μαΐου.