Clear66° FULL FORECASTClear66° FULL FORECAST
Make us your home page
Instagram

EU panel urges cooperation, cutbacks by member nations

Unions protest Greek reforms Riot police officers walk Wednesday by an Athens bank where the spray paint on the closed shutters at left reads “general strike forever” and, at right, “burn the bosses.” Greek labor unions plan a strike to protest cuts to pensions, and government officials await the first part of a $140 billion package to stave off bankruptcy.

Associated Press

Unions protest Greek reforms Riot police officers walk Wednesday by an Athens bank where the spray paint on the closed shutters at left reads “general strike forever” and, at right, “burn the bosses.” Greek labor unions plan a strike to protest cuts to pensions, and government officials await the first part of a $140 billion package to stave off bankruptcy.

BRUSSELS — European Union officials urged a crackdown on widespread government overspending, calling Wednesday for much closer economic coordination between EU nations to curb the acute debt crisis that has threatened to sink their shared currency.

The plan by the EU's executive commission advocated unprecedented scrutiny of countries' spending plans even before they go to their national parliaments — and new financial penalties for rule-breakers.

That would deepen the ties that bind 16 nations in Europe's currency union and would curtail some nations' power over their own economies in an attempt to keep more reckless spenders like recently bailed-out Greece from dumping their debts on all eurozone members.

EU Economy Commissioner Olli Rehn said the EU's moves would ensure that national governments' spending plans were "consistent with European objectives."

They will also "lead to a substantial deepening and prudent widening of the economic and monetary union," he said.

German Foreign Minister Guido Westerwelle, who heads the smaller party in Germany's coalition government, rejected the idea, saying the EU should not interfere with the "core of national sovereignty," the DAPD news agency reported.

German Chancellor Angela Merkel was less concerned, saying that budget programs "were not secret" and that it would not be a problem for parliaments to know the European Commission's views on national budgets at an earlier stage.

But Merkel said that she didn't believe the EU plans went far enough and that the EU would need more radical legal changes that could require lengthy parliament votes and public polls by member nations.

"We believe that treaty changes must be involved if you really want to have a strong stability and growth pact," she said, according to DAPD.

Heavy European government debt loads have raised fears of government defaults, financial panic and even the breakup of the eurozone — fears calmed for the moment by a $1 trillion bailout package announced Monday by eurozone countries and the International Monetary Fund.

The EU is now calling for governments to do more to cut their mounting debt, replacing the EU's existing focus on budget deficits — the yearly differences in public spending and income.

European governments have been loaded with debt from the high costs of saving banks and paying out far more to support economies and welfare systems during the recent recession. The EU average increased to 80 percent of national income, above the 60 percent legal limit originally set up to safeguard the euro.

Spain clamps down

Spain will cut civil servants' salaries an average of 5 percent this year as part of a deficit-reduction plan to ease worries the country will slide into a debt crisis like that of Greece, Prime Minister Jose Luis Rodriguez Zapatero announced Wednesday. The plan, set to start in June, also includes a suspension in automatic inflation-adjustments for retirement pensions, a drop in overseas aid, a $7.6 billion reduction in government investment in 2010-11 and elimination next year of a tax break for couples that have babies or adopt a child. With these measures, Spain aims to cut its deficit from 11.2 percent of gross domestic product last year to 9.3 percent this year, and eventually to 3 percent in 2013.

EU panel urges cooperation, cutbacks by member nations 05/12/10 [Last modified: Wednesday, May 12, 2010 9:02pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...