| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

We provide access to live business television and business related videos from: Bloomberg TV; The Wall Street Journal; CNBC and the Financial Times. Click image:

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax 2008

Climate Change Reports

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : EU Economy Last Updated: Jan 13, 2010 - 7:28:18 AM


Public finance problems in Greece posing “a very serious challenge” for the euro; Estonia likely to be the next country to join the Eurozone
By Finfacts Team
Jan 12, 2010 - 5:55:19 AM

Email this article
 Printer friendly page

Olli Rehn, the Finnish commissioner-designate for the key economic and monetary affairs position on the European Commission

Public finance problems in Greece and some other European Union (EU) member states hit by the financial crisis, are posing “a very serious challenge” for the euro, Olli Rehn, the Finnish commissioner-designate for the key economic and monetary affairs position on the European Commission, told members of the European Parliament at a confirmation hearing on Monday. Rehn said Estonia is likely to be the next country to join the 16-member state  Eurozone.

Rehn promised to use “all instruments” to help member states restore their finances and come into compliance with the terms of the Stability and Growth Pact, which sets out the main economic compliance rules for members of the Eurozone.

“We need to put more rigour into the application of the Stability and Growth Pact,” Rehn said, calling for greater economic coordination among the EU’s 27 member states.

Rehn did not support calls for more effective sanctions for non-complying states but suggested using “incentives” to encourage them to move toward compliance and “broader surveillance”.

Rehn, is currently enlargement commissioner and will take over the economic role from Joaquín Almunia, who has been nominated for the high-profile trade role.

“We really have to focus on economic growth and job creation,”Rehn told MEPs, noting his top priorities.

Rehn was questioned by several MEPs about the fragile situation in Greece.

”The problem in Greece concerning the excessive deficit and the rapidly rising public debt is a very serious one, especially for Greece, Greek citizens and taxpayers. Of course, it also has potential spillover effects for the whole Eurozone,” Rehn said.

He said he expected the Greek government to present a “comprehensive plan” in the coming days to demonstrate how it would reduce its deficit. “The Greek government is aware of the seriousness of the problem,” he said.

The Finn said he had an open mind when asked about the idea of issuing a common eurobond to fund infrastructure projects in the EU.

Rehn also said Estonia is likely to be the next country to join the Eurozone.

"Estonia is rather close, but we will have to ensure that all the rules are respected, that the (EU) treaty is respected, and we will return to this matter in the coming spring," Rehn said.

Estonia, with a population of 1.4 million people, won its independence in 1991, after the collapse of the Soviet Union, but has been struggling to overcome the financial crisis, which hit its region hard.

Estonia sees adoption of the euro as a means of boosting foreign investment.

European Parliament summary of hearings:

An EU co-ordinated exit strategy from the crisis establishing healthy public finances in the member states are both essential to ensure a sustainable basis for economic recovery in Europe. This was the gist of economic affairs commissioner designate Olli Rehn's message in his hearing with the Economic and Monetary Affairs Committee.

During the three hour hearing, MEPs questioned Rehn on issues ranging from the EU2020 strategy, the suitability of existing and recently proposed policy coordination instruments, the challenges stemming from the future enlargement of the Eurozone, the current situation of Greece’s public finances and the EU’s role in developing a more balanced global macro-economic order.

Mr Rehn said his mission as economic affairs commissioner would be "to do what citizens expect of us in these times of crisis: provide future perspectives for jobs and prosperity, growth and stability".

Exit strategies and healthy public finances

Jean-Paul Gauzès (EPP, FR) asked how Mr Rehn would approach the double objective of ensuring an exit strategy and bringing about healthy public sector accounts. Mr Rehn argued these cannot be considered as mutually exclusive goals because although deficits need to be reduced growth, is dependent on investment.

Vicky Ford (ECR, UK) argued that taxes needed to be reduced for the private sector to be more involved in research investment. Mr Rehn agreed, but also said that tax systems need to be fair and support the development of society.

Policy co-ordination instruments and supervision

Many MEPs raised the issue of improved co-ordination and supervision. Udo Bullmann (S&D, DE) asked how Mr Rehn envisaged ensuring better co-ordination among the member states on economic policy. The Commissioner Designate replied that he would use Lisbon Treaty tools to step up co-ordination in the Euro area and deepen preventive surveillance.

Werner Langen (EPP, DE) asked about the suitability of the Stability and Growth Pact and how it could be strengthened. Mr Rehn reiterated that the Pact is the right mechanism to return to stability and that together with the Treaty rules,it would ensure that member states conform. He added that Greece will be the first test for these mechanisms.

Godfrey Bloom (EFD, UK) asked what lessons the Commissioner Designate would take on board from the crisis. Mr Rehn replied the crisis made clear that it will be essential quickly to adopt the micro- and macro- prudential financial supervision package. He also recommended stronger supervisory capacity at the EU level.

EU 2020 strategy for growth

Sylvie Goulard (ALDE, FR) remarked that the EU's 2020 strategy for growth must be based on mechanisms which are binding, in contrast to those of the Lisbon strategy. Mr Rehn noted that the Lisbon strategy lacked ownership, but said that with the new Treaty in force, new instruments can be used to reach the EU 2020 targets..

Jürgen Klute (GUE/NGL, DE) asked about the role of the state as an economic player. According to Mr Rehn, the state must be there to facilitate innovation, investment in education and the take-up of green technologies, all key elements in the EU 2020 strategy.

Eurozone enlargement

Several MEPs asked about Eurozone enlargement. Arturs Krišjănis Karinš (EPP, LV) asked about the timetable. Mr Rehn confirmed that the next country to join the zone will most probably be Estonia, and stressed that all timetables are dependent on the rules laid down in the Treaties.

Olle Schmidt (ALDE, SE) inquired whether Sweden could still stay out of the Eurozone. Mr Rehn replied that it is up to the Swedish people to decide on the issue.

International economic order

Turning to the EU's place on the international scene, Wolf Klinz (ALDE, DE) asked about Mr Rehn's programme for dealing with the EU's differences with the US.  Pascal Canfin (Greens/EFA, FR) asked for Mr Rehn's views on China's proposal for reform of the monetary system.

Mr Rehn said the EU has worked well with the US particularly through the G20 and that more discussion is needed with the US but also with China on balancing the macro-economic situation.  With regard to the monetary system proposal, Mr Rehn found the fact that China is willing to engage in multilateral co-ordination interesting and promising.

Commission hearings website

Related Articles


© Copyright 2009 by Finfacts.com

Top of Page

EU Economy
Latest Headlines
Draghi says economic outlook has improved but subject to downside risks
Greek leaders agree new austerity measures to pave way for second bailout
ECB keeps benchmark interest rate of 1.0%; Bank of England keeps rate unchanged and adds £50bn to bond-buying program
German exports fell in December; Exports rose 11.4% in 2011 to €1.06trn
Greece’s debt rose to 159.1% of GDP in Q3 of 2011 from 138.8% year earlier; Ireland's rose from 88.4% to 104.9%
Eurozone service sector stabilises in January as growth in France and Germany offsets declines in Spain and Italy
Spain's Insider-Outsider Divide: Young temporary workers overwhelmingly the victims of brutal recession
Eurozone annual inflation is expected to be 2.7% in January 2012
Eurozone Bank Lending Survey shows falling loan demand in Ireland and rest of Eurozone in Q4 2011
Eurozone manufacturing downturn eases in January as Germany returns to growth
Eurozone unemployment rate stable at 10.4% in December; Irish jobless rate at 14.5%; Spain at 22.9% and Austria at 4.1%
German retail sales fell in December but rose in 2011; Number of unemployed fell 420,000 in 2011
Japan's manufacturing began 2012 in growth mode; Data also shows output jumped in December on recovery from Thai flooding disruptions
Summit of EU leaders underway in Brussels; France cuts 2012 GDP forecast to 0.5%; Italy raises €7.5bn at reduced rates
Optimism among German consumers increased at the beginning of 2012
Merkel tells Davos elite reforms cannot be ignored; Unused EU funds could support SMEs, entrepreneurs and R&D investments
German business confidence jumped to a five-month high in January
Eurozone's manufacturing and services sectors recovered in January; Output rose strongly in Germany
Bank of Spain forecasts economy will contract -1.5% in 2012; Bank of France governor says France's economy will accelerate in the spring
IMF chief Lagarde says Eurozone needs bigger firewall to prevent Italy and Spain sliding towards default
Juncker says Eurozone must find ways to boost economic growth while cutting public budgets
IMF needs to raise $300bn in additional lending resources; Germany and Portugal hold successful bond auctions
Germany cuts its 2012 GDP forecast to 0.7%; "Germany is and remains an anchor for stability and growth in Europe"
European borrowing costs dropped Tuesday: European Commission begins legal action against Hungary
Eurozone annual inflation was 2.7% in December 2011 down from 3.0% in November
German economic sentiment increased in January
Firms up to 5 years old responsible for most job creation in Europe
Italy, Spain, Greece have had trade deficits with Germany since at least 1980 -- 20 years before euro launch
Draghi says signs the economy is stabilising; Strong market interest for Italian and Spanish bonds
Industrial production down by 0.1% in November in both Eurozone and EU27; 12-month production also down
Merkel has "great respect" for recent Italian economic reforms; Germany may provide more cash for rescue fund
Fitch Ratings says Italy is biggest threat to euro
German exports rose in month of November 2011 while imports fell; Almost 50% of exports were ex-EU27
Eurozone Business Climate Indicator improved in December; Economic Sentiment Index of business/ consumer confidence fell to a 2-year low
Eurozone unemployment at 10.3% in November - - 45,000 job losses in month; Austria at 4%; Ireland at 15% and Spain at 23%
Eurozone sales volume down 0.8% in November 2011
Eurozone industrial orders rose in October less than expected after sharp plunge in September
Eurozone annual inflation expected to be 2.8% in December 2011 down from 3.0% in November
Eurozone services activity falls in December led by downturns in Italy and Spain; Germany and France rise
Manufacturing activity in the Eurozone fell for a fifth straight month in December