Fin24

Rehn: Budget pact not stupid

2012-05-06 10:59

Brussels - EU economy commissioner Olli Rehn on Saturday said an European Union pact to fix government finances "was not stupid" as it strikes a balance between necessary fiscal consolidation and growth.

"Contrary to the misleading impression promoted by some politicians and pundits" that the pact offers only austerity, "the Stability and Growth Pact is not stupid", Rehn said in a speech at Vreije Universiteit in Brussels.

The fiscal pact, clinched after marathon talks by EU leaders in March, is a German-inspired accord that puts pressure on governments to rein in spending and was signed by all 27 EU countries except Britain and the Czech Republic.

Rehn said that while the pact did impose sanctions on nations that did not meet deficit and debt rules, it was not a "'one-size-fits-all' consolidation straightjacket".

Rehn said the pact "entails considerable scope for judgement, based on economic analysis and its legal provisions".

Voters across the EU are restive as a series of austerity measures intended to stabilise strained public finances have also slashed growth and jobs.

Elections scheduled for Sunday in France and Greece are forecast to oust sitting governments in favour of candidates who have pushed for a less stringent response to the eurozone's debt crisis.

The frontrunner in the French presidential race, Socialist Francois Hollande, has said he will press for growth measures to go alongside the pact's tighter spending controls if he wins the election.