WRITTEN QUESTION E-0660/97 by Pedro Marset Campos (GUE/NGL) to the Commission (6 March 1997)

Subject: Maintaining public services of general interest

In view of the negative impact of the restrictive application of the Maastricht criteria for EMU on public services of general interest and in areas such as health, research, social services, pensions etc., which along with unemployment are worsening the quality of life in Europe, above all in the poorest countries and regions, does the Commission not think that it is essential to amend the criteria so that spending on maintaining the aforesaid public services of general interest is not taken account of in measuring the GDP deficit and public debt?

Answer given by Mr de Silguy on behalf of the Commission (8 April 1997)

The Commission does not agree with the Honourable Member. It is not compliance with the convergence criteria that is damaging public services of general interest but the existence of excessive deficits or unsustainable levels of debt. Countries that manage to consolidate their budget situations contribute to a return to more buoyant and more lasting economic growth, and this means that they are better placed to finance public services. By contrast, those countries that defer the necessary adjustments add to the difficulties they already face in performing the basic functions of public authorities and, as a result, have to contend with more sluggish growth, higher unemployment and a mounting public debt burden. What is more, the position of the Honourable Member does not reflect the macroeconomic strategy recommended by both the Council and the Commission with a view to restoring the conditions for stronger, more lasting growth by virtue of the less stringent policy mix made possible by budgetary consolidation.

Without prejudice to the further reduction of budget deficits, a number of general principles have been very explicitly spelt out since 1993 by the Community authorities in the broad economic policy guidelines, especially

point 4 of those adopted in July 1996 ((European Economy No 62, 1996, p. 6. )), which advocate redirecting government spending towards activities conducive to the development of endogenous growth factors such as investment in infrastructure, human capital and active labour-market measures. However, under the subsidiarity principle, Member States' authorities have sole responsibility for deciding on the trade-offs to be made between different categories of spending. Budgetary discipline does not, therefore, impose any requirement to reduce specific categories of spending since this choice is a matter solely for the national authorities.

The distinction sought by the Honourable Member with a view to removing from the deficit and debt criteria certain categories of spending on public services which, it is felt, cannot be further reduced for reasons to do with the quality of life and on account of social objectives would give rise to major problems of definition. For, this is a relative concept that stems from a policy trade-off peculiar to each country and so would create confusion, thereby undermining altogether the credibility and effectiveness of the monitoring exercise for excessive deficits laid down in the Treaty (Article 104c).