Mr President, the obituaries for the Stability Pact have been written before and then held back as the patient lurched on, if only on life support. What we witnessed last week was finance ministers giving the last rites to rules which were intended to guarantee the long-term stability of our currency and economy. Of course, the guilty parties deny all responsibility, or claim 'the Pact is dead, long live the Pact'. But the truth is that the eurozone's two leading economies have sent a message to all the small countries in the eurozone, and to the acceding countries, which reads 'do as we say, not as we do'. And I should like to point out to Mr Tremonti that the Italian presidency has failed in its duty by acting as an associate in the endeavours of the countries concerned to flout the Pact, rather than ensuring that the rules were respected. We will pay a heavy price for the cavalier disregard of finance ministers for the rules of the Stability Pact. We will pay a price in terms of damage to the trust between Member States, in terms of lost credibility in the eyes of our citizens, and, in the long run, in terms of higher interest rates, lower growth and currency instability. Unless our leaders agree on a revised and workable framework for fiscal stability, and inscribe this in our basic law, then we are left with nothing but a broken gentlemen's agreement. Countries which gave up their currencies on the understanding that they would not be expected to pay for the debts of their neighbours have a right to demand more than that. That is why my Group welcomes the stand taken by Commissioner Solbes and the Commission's intentions to make proposals to reshape the rules. If you kill off the Pact in its existing form, you have a responsibility to commit yourself to an agreed interpretation of a set of rules to prevent a borrowing free-for-all. Liberal Democrats believe that a well-run economy and a stable currency require taxes and spending to be in balance over the course of the business cycle. The problem is not the 3% deficit limit; the problem is the failure of countries to consolidate their budgets in terms of growth. My surprise at hearing the leader of the Socialist Group in this House agree with us is matched only by my delight at his conversion. The revised rules should provide sticks and carrots to ensure that we take advantage of periods of economic growth to run budgets in balance or in surplus and reduce national debt. Countries which operate a responsible policy in the good times could benefit from more flexibility in bad times to let borrowing take the strain. These rules should provide for early action against countries which do not control their deficits in periods of growth, to force them to take corrective measures. A new target for the underlying budget balance could be added, and government expenditure on investment should also be taken into account. The European Commission should have greater authority to police these new rules, since national governments have shown that they cannot be trusted to do so. This has been a bad week for the rule of law in the European Union. My Group hopes that at the summit in Brussels our leaders will recognise their responsibility to salvage, from the wreckage of the Stability Pact, some credibility for Europe's fiscal policy . (Applause)

Political group: ELDR