Automatic Austerity 10 things you need to know about ’the Fiscal Compact’

ΠΗΓΗ: Corporate Europe
March 2012


ΟΛΟΚΛΗΡΟ ΕΔΩ

On the 1st of March 2012, 25 EU heads of state or government will sign a new treaty

, and if all  goes as planned, it will enter into force early next year. The so called ‘Fiscal Compact’ was 

conceived in next to no time, and had a dramatic start when it was vetoed by the UK at a meeting 

of the European Council on 9 December, preventing a regular change to the EU treaty. Instead, 

governments opted to create a new legal vehicle – which can be adopted more quickly with less

risk of annoying interference from democratic debate and the public; a separate EU-treaty that’s 

not really an EU-treaty.

The treaty is about strengthening the rules to ensure signatory states apply strict budgetary 

policies. Notably, so called ‘structural deficits’ are to stay permanently below a limit of 0.5 % of 

GDP. News of the treaty was applauded by the business community, including the European 

employers’ federation BusinessEurope, but trade unions denounced it emphatically, with the 

European Trade Union Confederation for the first time rejecting a new treaty outright.

Why now?

"This Treaty might reassure Kanzlerin [Chancellor] Merkel’s political friends, but not the millions 

of unemployed, poor or precarious workers in Europe who are waiting for decisive support from 

EU institutions. This is why we are opposed to it,” Bernadette Ségol, the secretary general of 

ETUC said

Most analysts and commentators agree: the treaty is not about the current crisis. It will not 

change the course of the eurocrisis, and is not really intended to do so. It’s about the future of 

economic policy, and the German electorate. Chancellor Angela Merkel needs to reassure the 

German public that she’s being tough with the highly indebted countries to bolster her popularity 

and provide the government with the leeway to co-fund the new European Stability Mechanism –

the fund to provide loans to member states in deep economic trouble. To do this she must ensure 

they stick to a tough austerity programme in return.....

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