EU stability pact in danger: finance minister

The EU stability pact may be in serious danger because of the different approaches member states are tacking to the economic crisis, finance minister Wouter Bos said on Tuesday.

The pact, set up to ensure the stability of the euro, states that member states’ budget deficits should not go over 3% of GDP. Nearly all countries, including the Netherlands, have exceeded the limit.
Speaking in Brussels, Bos said it was worrying that Germany and France had taken a totally different approach to their treasury shortfalls.
‘Germany has a very rigid rule which forces short-term steps, even a halt on spending as California has done,’ Bos was quoted as saying by news agency ANP. But France has said this does not work and that some debts are good to have, Bos said.
The different approaches are ‘confusing’ and could potentially destabilise the economy, Bos said.
Countries which have higher budget deficits than 3% are supposed to take measures to reduce them over a number of years. ‘My fear is that everyone says yes to the deadline and then does nothing,’ Bos was quoted as saying.
Several years ago, Bos’s predecessor Gerrit Zalm had a showdown with Germany about its wish to take a more liberal approach to the pact. Zalm was eventually forced to back down, ANP says.

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