European Parliament resolution on the communication from the Commission to the Council and the European Parliament on public finances in EMU — 2003 (COM(2003) 283 — C5-0377/2003 — 2003/2151(INI))
Date: 2004-02-26
Institutions: Committee on Economic and Monetary Affairs, European Parliament
Subjects: EU growth strategy, Economic and Monetary Union, accession to the European Union, administrative expenditure (EU), budget deficit, economic situation, investment promotion, public finance, stability pact

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P5_TA(2004)0117

Public finances in Economic and Monetary Union (2003)

European Parliament resolution on the communication from the Commission to the Council and
the European Parliament on public finances in EMU (cid:1) 2003 (COM(2003) 283 (cid:1) C5-0377/2003 (cid:1)
2003/2151(INI))

The European Parliament,

(cid:1) having regard to the communication from the Commission (COM(2003) 283 (cid:1) C5-0377/2003),

(cid:1) having regard to its resolution of 12 March 2003 on the communication from the Commission on

public finances in EMU (cid:1) 2002 (1),

(cid:1) having regard to the communication from the Commission to the Council and the European Parlia-

ment entitled ‘Strengthening the co-ordination of budgetary policies’ (COM(2002) 668),

(cid:1) having regard to the communication from the Commission to the Council and the European Parlia-

ment on structural indicators (COM(2002) 551),

(cid:1) having regard to Council Decision 2002/923/EC of 5 November 2002 on the existence of an excess-
ive deficit in Portugal and the adoption of a recommendation of necessary measures to combat the
deficit (2),

(cid:1) having regard to Council Decision 2003/89/EC of 21 January 2003 on the existence of an excessive
deficit in Germany and the adoption of a recommendation of necessary measures to combat the
deficit (3),

(cid:1) having regard to Council Decision 2003/487/EC of 3 June 2003 on the existence of an excessive
deficit in France and the adoption of a recommendation of necessary measures to combat the defi-
cit (4),

(cid:1) having regard to the Commission recommendation of 8 October 2003 to the Council to adopt a
decision that France has taken no effective action in response to the recommendation made by the
Council pursuant to Article 104(7) of the EC Treaty within the period laid down in that Recommen-
dation,

(cid:1) having regard to the July 2003 report entitled ‘An Agenda for a Growing Europe’ by a high-level
group established on the initiative of the President of the Commission and chaired by André Sapir,

(cid:1) having regard to the Presidency Conclusions adopted by the European Council in Lisbon on 24 March
2000 and in Gothenburg on 15/16 June 2001, with particular reference to the strategy agreed on
with respect to economic growth, full employment, sustainable development and social cohesion,

(cid:1) having regard to the Presidency Conclusions adopted by the European Council

in Stockholm on
23/24 March 2001 and in Barcelona on 15/16 March 2002, with particular reference to the ‘Stability
and Growth Pact’ and the budgetary challenges, including the quality of public finances in the light of
demographic change,

(cid:1) having regard to the conclusions of the Italian Presidency adopted by the European Council in Brussels

on 16/17 October 2003, with particular reference to the ‘Growth Initiative’,

(cid:1) having regard to Rules 47(2) and 163 of its Rules of Procedure,

(cid:1) having regard to the report of the Committee on Economic and Monetary Affairs (A5-0044/2004),

A. whereas at the end of 2003 the economic recovery heralded by the Commission in its previous
economic forecasts had yet to materialise; whereas due, inter alia, to a lack of structural reforms in
many Member States, the GDP growth rate for the euro zone fell once again in 2003, shrinking from
3,5 % in 2000 to 1,5 % in 2001, 0,9 % in 2002 and 0,5 % in 2003 and leaving Europe’s economy on
the brink of stagnation,

(1) P5_TA(2003)0092.
(2) OJ L 322, 27.11.2002, p. 30.
(3) OJ L 34, 11.2.2003, p. 16.
(4) OJ L 165, 3.7.2003, p. 29.

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B. whereas public and private investment alike across the European Union as a whole has fallen sharply

by 2,4 %, thereby further weakening growth,

C. whereas geopolitical events such as the war in Iraq and SARS have been particularly damaging to

confidence in the economy and growth in Europe,

D. whereas the appreciation of the euro against the dollar could entail risks in the medium-term for the

competitiveness of the European economy and exports in particular,

E. whereas in 2002 the euro-zone budget deficit rose to 2,2 % of GDP from 1,6 % in 2001 and 1,1 % in

2000 and is likely to approach 3 % of GDP in 2003,

F. whereas at the end of 2002 only four countries in the euro zone (cid:1) together accounting for a mere
18 % or so of the euro-zone GDP (cid:1) had reached a close-to-balance position and whereas, conversely,
three countries had exceeded the figure of 3 % of GDP,

G. whereas three excessive deficit procedures have been initiated to date against Portugal, France and

Germany,

On the current state of public finances in the Member States

1.
Notes that, in the Commission’s view, the economic cycle is only partly to blame for the higher
nominal deficits, which are in fact largely the result of a discretionary loosening of budgetary policy on
the part of some Member States;

2.
Notes that, pursuant to Article 104(8) of the EC Treaty, on 8 October 2003 the Commission recom-
mended to the Council that it take note of France’s failure to introduce specific measures to reduce its
public deficit to less than 3 % of GDP in 2004;

Notes that

3.
the French Government has taken a first step in implementing structural reforms
(pensions reform, the implementation of social security reform), which should be highly beneficial to
public finances in the long term but will not reduce the budget deficit in the immediate future;

Calls, therefore, on the Commission to put forward the necessary adjustments for a more intelligent

4.
application of the Stability and Growth Pact in line with the Lisbon objectives;

Emphasises the importance of introducing structural reform packages which in the medium and long
5.
term will prove crucial for financial sustainability, for the competitiveness of the European economy and
for growth;

Congratulates the Commission on the progress achieved in defining methods for improving the EU
6.
budgetary surveillance framework, both by including the applicant countries in the framework and by
improving the procedure whereby budget statistics are drawn up;

On the accession countries

Notes that the management of economic change in the countries of central and eastern Europe has in

7.
some accession countries had a heavy impact on their deficit and public debt levels;

8.
Urges the accession countries to reduce their deficit levels significantly to below 3 % of GDP to
ensure fiscal and price stability in an enlarged European Union; recalls that entry to EMU is subject to
the four convergence criteria set out in Article 121(1) of the EC Treaty and the protocol relating to that
provision;

9.
Urges the accession countries to speed up reform of their public finances by reallocating resources as
a further move towards ensuring the genuine convergence of their economies and to focus in particular on
the modernisation of their pensions and social benefits systems in support of an effective employment
policy;

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Emphasises the need for continuous improvements in fiscal administration and the establishment of

10.
an effective tax collection system;

On potential proposals

Reminds the Member States of the commitment which they gave in the Stability and Growth Pact
11.
to bring budgets ‘close to balance or in surplus’; emphasises the importance of balanced budgets and price
stability as prerequisites for sustainable growth;

Reiterates its call for a clear method that includes a definition of ‘high-quality public spending’ to
12.
quantify public budgetary positions and their contribution to growth and investment with a view to
making a positive contribution to achieving the Lisbon goals;

13. Welcomes the Commission proposal on the list of structural indicators and calls on the Commis-
sion to establish a precise definition of structural deficit;

14. Welcomes the proposals of the Italian Presidency and of the French and German Governments to
promote initiatives for growth in Europe; considers that these proposals should be more clearly reflected in
the Council conclusions on the European Initiative for Growth; emphasises that the best way for Europe to
cope with the challenges of an innovation-based global economy is by investing in human resources
through secondary and life-long learning; insists on the need for more ambitious investment activities to
improve education and life-long learning and help develop clean and
increase the employment rate,
environmentally-friendly technologies;

15.
Congratulates the Italian Presidency on its initiatives for growth in Europe, and calls on future
presidencies of the Union and the Council to pursue this route by working towards a genuine internal
growth strategy for the European economy;

16.
Considers, however, that a real boost to the European Union’s productivity and economic potential
requires an increase in budgetary allocations at European and national level in order to support more
effective pan-European investment;

17.
Is of the opinion that, in the interests of boosting public and private investment, it is most import-
ant to exceed the current pan-European public spending limit of 0,8 % of GDP, insisting that there is room
for manoeuvre in spending between 1 % and 1,27 % of GDP 2004-2006 in line with the present financial
perspective 2000-2006 and the Lisbon objectives as well as with the promotion of private investment
activities; furthermore calls for public expenditure to be redirected in such a way as to ensure that the
various budget headings at European and national level reflect the major political priorities set for 2010;

18.
Is of the opinion that a mid-term evaluation of the European Action for Growth initiative should be
submitted to both the European Council and the European Parliament by 2006 so that the necessary
conclusions can be drawn concerning the new Financial Perspective 2007-2011 and the new funding
period of the EU Structural Funds; calls for the European Parliament to be fully involved in the mid-term
evaluation of the Action for Growth initiative and calls on the European Investment Bank to report to the
European Parliament on its preparatory work as soon as possible; requests, in addition, that regions which
have to date been beneficiaries of the structural funds continue to be eligible following enlargement, on the
basis of new parameters;

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19.
Instructs its President to forward this resolution to the Council, the Commission, the European
Economic and Social Committee, the Committee of the Regions and the parliaments of the Member States.