Rules of investment, structural reforms, fiscal consolidation should be revised – Alfred Sant
Former Prime Minister Alfred Sant told the European Parliament that what is urgently needed in Europe, is a recognition that independently of Brexit and Trump, the rules on investment, structural reforms and fiscal consolidation should be revised.
Dr Sant said the European Semester rules have not led to a stable, significant and sustainable recovery in Europe, failing to boost growth, significantly reduce unemployment and revive investments. These rules, which were defined in a period when the state of affairs was completely different to the current one, were instrumental in driving down public investment.
Dr Sant addressed the European Parliament in Strasbourg on the European Semester package including the Annual Growth Survey 2017. This document was published by the Commission last week and the Commission officially presented it to European Parliament for discussion. The Annual Growth Survey officially launches the European Semester process for the year ahead. In particular, it sets out the general economic priorities for the EU and offers EU governments policy guidance for the following year. The Commission guidance is built around three inter-connected strands: investment, structural reforms and fiscal consolidation.
Dr Sant said it is counterproductive to refer to Brexit and the Trump election as a sign of the times that justifies reconsideration of policies followed under European semester rules. These rules were defined technically, even when sometimes, they were interpreted politically. They helped prevent a recurrence of 2008 but they have not led to a stable, significant and sustainable recovery in Europe. They failed technically and this is generating a political backlash.
The Maltese MEP said unemployment remains at historically high levels, economic growth anaemic. Investment has not revived, in the public and private sectors. The rules embedded in the European semester process are the main contributors to this state of affairs. They were defined in a period when the situation was completely different to the one we are in. The benchmarks they set no longer fit our circumstances. Some of them were anyway set arbitrarily and have no logical or existential justification.
The rules themselves were instrumental in driving down public investment. In turn, private investment which piggy backs on public investment was negatively affected. What is urgently needed in Europe, is a recognition that independently of Brexit and Trump, the rules set by the Stability and Growth Pact should be revised, Dr Sant remarked.