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EU to simplify rules to boost growth

Friday, June 20 14:58:22

The European Union will review its fiscal rules at the end of this year to see if they can be made simpler and more efficiently used to encourage growth and jobs after years of budget consolidation.

The review will focus on whether those changes have worked and if countries are now coordinating economic policies better.

"It's what we have had in mind, an evaluation of the whole question," Austrian Finance Minister Michael Spindelegger said today, add that "the detail and the question whether we need so many rules and complicated calculations is critical".

The review will also look at whether the rules are helpful in engendering economic growth and job creation - something Italy, which takes over the rotating presidency of the EU from July, questions.

The International Monetary Fund has called for the EU's Stability and Growth Pact to be simplified and EU Economic and Monetary Affairs Commissioner Olli Rehn and the chairman of the euro zone's finance ministers, Jeroen Dijsselbloem, have said there is room to do so.

"The problem isn't changing the rules, the problem is using the ample margins which already exist in the rules - they are very complex and there are many ways in which they can be used - to make them more adapted to the themes of growth and jobs," Italian Finance Minister Pier Carlo Padoan told reporters.

Any extra leeway with fiscal policy is likely to be closely linked to structural reforms, Rehn said, and, unlike in the past, governments may be required to get the reforms under way first before getting more time to reduce budget shortfalls.

The ECB and the IMF urged euro zone governments to move quickly on reforms to take advantage of the very low borrowing costs now offered by markets on a wave of investor optimism and search for yield.

"The window of opportunity is there. Market conditions are extraordinary, this cannot be taken for granted so action on structural reform is urgent," said ECB policymaker Benoit Coeure. (Reuters)