The European Union should stick to the deficit rules in its Stability and Growth Pact, the EU’s former top economic official Olli Rehn said when asked about the bloc’s July decision to not penalise Spain and Portugal for breaking deficit limits.
Amid fears of growing euro scepticism in the bloc, Madrid and Lisbon escaped being fined for not reducing their budget gaps to below 3 percent of gross domestic product.
Asked about that decision, Rehn – currently Finland’s minister of economic affairs – told Reuters that the bloc should obey its rules.
“(When assessing a member state’s fiscal policy) it is good to take into account such structural reforms that truly support sustainable growth and employment,” said Rehn, who stepped down from the commission in 2014.
“But once we have agreed on these rules, they should also be obeyed,” he said. “But I’m not aware of all the details behind the decisions on Spain and Portugal.”
One of the arguments for scrapping fines was that Spain has been effectively without a government since last December. Mediocre growth, which could be further damaged by cuts in public spending, was another.
Euro zone finance ministers discussed budget gaps in Bratislava on Friday, and the leaders of southern European states, due to meet later in Athens, are expected to push for budget rules to be eased.
Rehn was the EU’s top economic official during the euro zone debt crisis. He has applied for a seat on the board of the Bank of Finland as he looks to switch from government to monetary policy
Source: Reuters (Reporting by Jussi Rosendahl and Tuomas Forsell; Editing by Jon Boyle)