Basic Economic Policy Guidelines
Delivered in Plenary 15th May 2001
The Von Wogau Report understandably makes no mention of the criticism from the Commission directed atá the UK's Labour Government. Chancellor Brown, no doubt with the General Election in mind on June 7th, decided to promise considerable increases in public spending on health and education threatening without tax rises to breach the Stability and Growth Pact agreements and raising the proportion spent by the public sector beyond the desirable current 38% level. Mr Berlusconi's new Italian Economic package may
also be problematic for the Commission. It is particularly rich for the UK Chancellor to reject this criticism as interfering in Sovereign British fiscal affairs when at the same time he is making active plans for a Referendum to join the Euro subject to his arbitrary 5 economic tests which make no mention of the Constitutional issues behind EMU, dear to British Conservative hearts.
Once the UK is in the Eurozone we will have even less fiscal autonomy, (and I do not know what politically as opposed to legally binding guidelines really means in practice), as we are forced to harmonise our taxes upwards to avoid so called unfair tax competition and avoid distortions in Mr Von Wogau's proposed European Home Market, a name I, as a UK member object to, as it suggests that those 3 remaining states outside the Euro, of which my country is one, are not at home in Europe's single market, so I suggest that Euroland or Eurozone is much the preferred label, and I wish the Zone every success.
Although I have a language problem with the term social market economy (as we associate it with British Social Democracy) the description in the report rightly encapsulates a vision of a dynamic, deregulated, competitive free-market economy sensitive to the needs of the Environment and the Labour market, which I welcome. However I am not sure if the ECBs first 2 years have been a great success, as suggested, as they are still muddling through and remain somewhat opaque in their decision making process as
evidenced by their recent ╝ % interest rate reduction which came across as panicky and contradicted their own monetary and inflation targets as well as numerous declarations by Mr Duisenberg. But I too call on the EU to implementá the suggested liberalisation of the energy, post, airport and railway sectors and I also personally support the Single Sky initiative.
Mr Von Wogau is right. Europe will not become a fortress and overall its prospects look relatively rosy in these uncertain times.