Wednesday, November 16, 2011

Verhofstadt: "Nothing less than full economic and fiscal union including eurobonds will do"

“Intervening in an important debate today in Strasbourg on the future scope and structure of economic governance in Europe, Guy Verhofstadt (ALDE group leader) drew attention to widening spreads on European bond markets - even amongst AAA countries - and called for a bold and global step forward towards economic and fiscal union - the missing piece from the EMU project dating back 20 years to the Treaty of Maastricht.

"The Eurozone crisis has reached a very dangerous point. We are now witnessing increasing spreads on interest rates between national sovereign bonds and the benchmark German bund even for countries with a AAA credit rating like France which is now having to pay twice as much interest on its borrowing than Germany. What then is the value of such ratings ?

"The longer we delay decisive action to resolve the crisis, the more costly and radical the measures required.."

"Now a bold and global vision is necessary and a comprehensive plan that should include at least the following 7 measures:

1. Real economic government for the eurozone with enhanced powers and strong leadership from the European Commission;
2. A convergence plan that will align key national economic policy decisions affecting productivity, labour costs, tax policy and investment;
3. Full implementation of the strengthened Stability Pact and strict application of sanctions for sinners;
4. A global growth strategy that builds upon EU2020 and the Euro Plus Pact;
5. The creation of a permanent European Monetary Fund taking decisions by weighted majorities;
6. Agreement on a system of European stability bonds to bring discipline and stability to the bond markets;
7. Immediate strengthening of measures to bring down debt using both the EFSF and a mechanism for collective debt reduction as proposed last week by Germany's Council of Economic Experts."”

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