1. Evolution of the Stability and Growth Pact A Perspective on the Current Reform Agenda Rodney Thom Paschal Donohoe
2. “ Economic prosperity and the viability of the monetary union cannot be sustained without tackling past fiscal failures - a trend towards increasing government expenditure and taxation levels combined with high structural budget deficits and government debt accumulation.” The European Commission (2001)
3. “ I know very well that the Stability Pact is stupid, like all decisions which are rigid.” Romano Prodi, EU Commission President (2002)
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8. Deficit/GDP Levels – Euro Average Euro average only breached target deficit levels twice since Pact foundation. Source : Eurostat
9. Deficit/GDP Levels – Member States Consistent breaching of 3% reference level by mixture of Member States. 5 1 3 4 6 4 3 3 0 Breach (#) Portugal Italy Greece Germany 12 ‘ 05 Portugal Italy Greece 12 ’ 06 Greece 13 ‘ 07 Malta France Spain Greece Italy Portugal Austria Italy France Greece Germany N’lands Italy France Germany France Greece Germany Portugal Italy Greece Member States 14 12 12 12 12 11 Euro-zone (#) ’ 08 ‘ 04 ‘ 03 ’ 02 ‘ 01 ‘ 00
10. Debt/GDP Levels – Euro Average Source : Eurostat Continual breaching of Debt/GDP Target across Eurozone.
11. Debt/GDP Levels – Member States Key economies began to breach 60% reference from 03/04. Exception was Spain…..
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14. Macroeconomic Stability - Ireland and Spain - Both economies delivering Pact commitments. Both economies experienced massive and rapid fiscal deterioration. Focused on health of ‘state’ – ignored private and foreign sectors. EDP Use 36% 25% %Debt/GDP +1.9% +0.1% %Government Deficit Spain Ireland 2007 (Eurostat)
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22. Role of Monetary Policy Expansion of lending played a key role in driving asset price inflation.
