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Verhofstadt on EU summit: "Eurozone needs action not words"


31 Jan 2012


Euro & Finance

On the margins of today's summit of European leaders in Brussels aiming to agree a new fiscal stability pact to solve the financial crisis, Guy Verhofstadt (Liberal and Democrat group leader) stated:

"Today's summit of Heads of Government must contain progress on concrete actions to address the practical issue of debt reduction or it will be another wasted opportunity. The longer EU leaders delay taking the real decisions that are necessary, and not just tweaking the provisions of the Treaty, the more costly it will be to rescue the eurozone countries in difficulty."

"Over the last 18 months, Member States have collectively committed over €1 trillion of tax-payers money to the crisis and achieved nothing.  In contrast, a solution based on some form of debt mutualisation (even if temporary such as the redemption fund suggested by the German economic council) would comply with both the Treaty and the German constitutional court and be paid for by the bond holders (rather than taxpayers) via lower interest rate payments.  Such a system could be made to work without creating moral hazard by using the example of classic insurance policies - the less you claim the lower your premiums."

"As things stand, countries like Greece or Italy cannot sustain their debt repayments nor consider investing in future economic growth. EU inaction is condemning them to a negative spiral of debt and default."

"The proposed international agreement on fiscal compact, in its final form is no more than what is already provided for in secondary legislation. At least the intervention of Parliament's delegation to the working group has avoided the Community method from being marginalised and in maintaining a consistency with existing acquis on economic governance."

"The new agreement consolidates fiscal discipline but omits completely to address the other side of the coin - that of solidarity and investment that will create jobs and growth.  Finally EU leaders should act instead of producing more paper.  In this regard they should also agree to get the EU patent up and running as soon as possible and stop squabbling over the seat. Provisionally the seat of the court could be established in Brussels."

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