Mr President, the Ecofin Council’s failure to take a decision on the German and French deficits leaves a bitter taste in the mouth. It is never wise to by-pass freely accepted rules. It is a dreadful move to give the public the impression that in the Union some states are more equal than others, that the Federal Republic of Germany and France have the right to special treatment because they are Europe’s driving force. As far as Socialists are concerned, stability is a public good that must be defended. However, there will be no stability without growth. For years, the Socialist Group has called for an intelligent revision of the Pact, which places all its emphasis on stability and none on growth. The Pact is too rigid. It is the prisoner of criteria which, although freely accepted, do not take account of the realities of the economic cycles. I agree with Mr Tremonti on this point. Firstly, there is the ‘one size fits all’ approach. Some states operate with a public debt of around 60% while others have debt of over 100% of their gross domestic product. The Pact does not take these substantial differences into account. Then there are sanctions that are impossible to impose. Asking a state in an economic recession to make deposits or to pay large fines is like trying to cure someone of anaemia by bleeding them. Faced with the German and French deficits, the Commission wanted to ensure that the rules were respected. It could do nothing else. Yet now that the rules have been smashed, the Commission cannot continue to brandish the Tables of the Law. When the real country moves ahead of the legal country, the procedures must be adapted. In any event, the economic policy cannot be limited to mere observation of the procedures. This is where I also agree with Mr Tremonti. For the same reasons, my group is opposed to an appeal before the European Court of Justice. We are dealing here with a political problem that requires a political solution. We do not need to resort to the government of judges. As some of the Pact’s key provisions were clearly made obsolete by the political precedent imposed by the Ecofin Council, the Pact must be improved. It is unthinkable that if Portugal, Greece or Luxembourg had excessive budget deficits tomorrow, the Commission could put forward proposals going beyond those that were accepted by the Ecofin Council for Germany and France. The absolute rule of equal treatment of the Member States quite simply prohibits this. President Prodi has just highlighted the fact that following a serious crisis innovative solutions are needed. I therefore call on Commissioner Solbes who, after having preached virtue, must now preach intelligence. After having valiantly defended the principles, now the Commission alone has the freedom to propose a Stability and Growth Pact that is both rigorous and more flexible. It must be more rigorous in requiring states to maintain a balanced budget when growth exceeds 3% for example. It must be more rigorous in requiring states to reduce their debt when growth exceeds 3%. It must be more flexible, however, in times when the situation is not as positive, in particular by enabling states to deduct investment expenditure from the calculation of the budget deficit in accordance with the British golden rule. According to the Commission, 1% of investment expenditure generates additional growth of 0.6% of GDP. For example, the United States currently invests 3% of its GDP while Europe only invests a meagre 1%. If we look at economic growth on both sides of the Atlantic, we see a dogmatic Europe and a pragmatic America. I am not calling here for American-style deficits ... (The President cut off the speaker)

Political group: PSE