WRITTEN QUESTION P-3024/03 by Ilda Figueiredo (GUE/NGL) to the Commission. The need to suspend and revise the Stability Pact.
Date: 2003-10-08
Institutions: European Parliament, Provisional data
Subjects: Portugal, budget deficit, budget policy, coordination of EMU policies, economic policy, public debt, public expenditure, public finance, public investment, stability pact

20.3.2004

EN

Official Journal of the European Union

C 70 E/199

Answer given by Mr Byrne on behalf of the Commission

(14 November 2003)

The Commission did not recently cut the appropriations allocated to research into and prevention of
accidents in the Union by 30 %.

The proposals for financial support regarding accident and injury prevention received in the framework of
the 2003 funding round of the Community public health programme are currently being evaluated.
A decision on selection of projects to be financed is expected shortly. Several projects dealing with
accidents and injuries have been presented in the selection process.

(2004/C 70 E/215)

WRITTEN QUESTION P-3024/03

by Ilda Figueiredo (GUE/NGL) to the Commission

(8 October 2003)

Subject: The need to suspend and revise the Stability Pact

Since 2000, the EU has been suffering from major economic downturn and rising unemployment.
Forecasts for 2003 are not optimistic, strengthening the belief that the only way out of the recession is an
expansionist budgetary policy, which would help to stimulate economic growth and employment, and this
is confirmed by the Commission’s acceptance of the so-called ‘Initiative for Growth’. On top of the real
facts of the situation came the summer heatwave which destroyed thousands of hectares of forest as well
as and urban areas, wiping out lives, property, infrastructure and social facilities, particularly in Portugal,
5 % of whose national territory was devastated, thus heightening the impact of the economic recession
facing the country.

And over against this ever more tangible real state of affairs, we have the application of the irrational
criteria of the Stability Pact, which despite protests from various sides, remains rock solid in terms of its
objectives, while countries like Germany and France find themselves unable to meet the 3 % deficit limit
for the third year running.

This policy has led to disinvestment in social public spending, encouraged the blind privatisation and
selling off of the public heritage and inspired a dazzling array of creative accounting practices rendering
public accounts less transparent. The Sapir report itself admits that the ‘Stability Pact’ has been responsible
for the EU’s weak economic growth. There are voices within national governments and within the
Commission pointing out the need to modernise the Stability Pact and make it more flexible.

The Commission:

(cid:1) Does it not believe that the application of the Stability Pact is worsening the factors underlying the
EU’s economic recession and penalising economic growth, and for this reason, should be suspended
forthwith, as a matter of urgency, with a view to a global revision of the economic guidelines which
will guarantee the requisite stimulus for economic growth and increased employment?

(cid:1) Does it not believe that the implementation of the Stability Pact since 1997 has undermined public

services and the social responsibility of the Member States for their citizens?

(cid:1) Does it not believe that public investment spending should not be included when calculating the
deficit? And,
in the specific case of Portugal, given the current economic situation, does the
Commission not believe that the investment spending arising from this summer’s forest fires should be
excluded when calculating the country’s budgetary shortfall?

C 70 E/200

Official Journal of the European Union

EN

20.3.2004

Answer given by Mr Solbes Mira on behalf of the Commission

(7 November 2003)

The Commission considers that the budgetary goals and rule of the EC Treaty and the Stability and Growth
Pact remain valid. A budget position of ‘close to balance or in surplus’ provides an appropriate framework
for prudent budgetary management that is in the economic self-interest of all countries. The budgetary
objective of ‘close to balance or in surplus’ provides ample room to allow the automatic stabilisers to
operate fully in response to economic downturns and to cope with the budgetary impact of major reforms.
It is also an appropriate medium and long-term goal, given high debt levels in many countries, substantial
contingent liabilities and because ageing populations will lead to large increase in spending on pension and
health. All these challenges can only be met if countries make sustained efforts to run down public debt in
the coming decade.

In the area of public finances, governments can contribute to the Lisbon goals by spending public money
as efficiently as possible, by redirecting public expenditure towards growth-enhancing cost-effective
expenditure subject to overall budgetary constraints, and by seeking a higher leverage of public support on
private investment. Indeed, this is the reasoning behind guideline No 14 of the Broad Economic Policy
Guidelines adopted by the Council on 26 June 2003. This guideline contains several ways in which the
public sector should enhance its contribution to growth, one being ‘by redirecting, i.e. while respecting
overall budgetary constraints, public expenditure towards growth-enhancing cost-effective investment in
physical and human capital and knowledge’. The implementation of this guideline together with structural
reforms on which the Council has repeatedly given priority will boost economic growth and employment.

The interaction between the Union’s budgetary rules and public investment has been investigated in detail
in the report Public Finances in Economic and Monetary Union (EMU) 2003 (1). A careful analysis of the
data fails to show any clear-cut link between change in the investment ratio and the provisions of the
Union’s framework for fiscal surveillance. Indeed public investment expenditures in many Member States
have stopped falling after the beginning of monetary union.

Regarding the specific case of Portugal, on 17 September 2003 the Commission proposed an appropri-
ation of EUR 48,5 million in the context of the Union solidarity fund on account of the forest fires. Finally,
with respect to budgetary developments the Council on 11 November 2002 made recommendations to
Portugal with a view to bringing an end to the situation of an excessive government deficit in 2003 at the
latest. In monitoring the situation (cid:1) in order to establish whether the Portuguese authorities comply with
the Council recommendations (cid:1) the Commission considers all relevant information, including the latest
economic forecasts that take into account the events of summer 2003.

(1) COM(2003) 283 final.

(2004/C 70 E/216)

WRITTEN QUESTION E-3028/03

by Marianne Thyssen (PPE-DE) to the Commission

(17 October 2003)

Subject: Approval of support for Ford’s Belgian car manufacturing plant in Genk and its suppliers

According to the Flemish authorities, on 12 September 2003 the Commission approved the granting of
support for an investment programme for the Ford car manufacturing plant in Genk (in the Belgian
province of Limburg), and for a number of component suppliers. The Commission has apparently agreed
that an amount of EUR 45,06 million can be granted to Ford and EUR 2 million to its suppliers.

Can the Commission say whether it has in fact approved this support and, if so, what the amount involved
was? Were any conditions imposed on the granting of this support, and if so what conditions, and under
what programme or programmes can the support be granted?