Interparliamentary Conference on SECG: Calls for Strengthening Fiscal Policy Framework

Austrian Parliament, 17 September 2018

Niels Thygesen, Gottfried Haber and Othmar Karas Urge More Sustainability in European Budget Policy

Vienna (PK) – “We must seize the current favourable economic conditions to push for a sustainable budget policy in Europe.” With his call, Niels Thygesen, Chair of the European Fiscal Board, provided the motto for the first round of discussions at the Interparliamentary Conference on SECG, which focused on the implementation of a fiscal policy framework. Gottfried Haber, Chair of the Austrian Fiscal Advisory Council, also called for more robust fiscal regulations, which he believes should also offer Member States flexibility for making cyclical corrections. Austrian Member of European Parliament Othmar Karas, as the deputy chair of the conference, advocated the expansion of the European Semester, also arguing that a common currency needed common economic, physical and finance policies.

Thygesen: The European Union must seize its window of opportunity

Since the 1980s the EU Member States have been pursuing budget policies that have tended to strengthen rather than dampen economic cycles, analysed Niels Thygesen in his introductory statement. It was not until the Treaty of Maastricht that a stabilising framework aimed at long-term sustainability was created. Mr. Thygesen pointed to predominantly positive macroeconomic indicators, stressing that the current broad-based economic expansion in the euro zone has opened up an opportunity for pursuing sustainable budget policies with an eye toward fiscal policy stability. According to the European Fiscal Board chair, the focus should be on establishing fiscal buffers against the backdrop of the current positive economic environment. In the past, favourable periods were often used to increase expenditure and cut taxes, a mistake that has been repeated frequently. This must no longer be allowed to happen, he admonished. Mr. Thygesen summed up his proposals for the upcoming Fiscal Compact by stating that instead, stronger, but simpler and primarily more flexible fiscal rules were needed to ensure compliance by all Member States.

Haber: Clear rules, but leeway for individual Member States

Gottfried Haber came out in favour of a robust fiscal policy framework with clear rules that would also allow individual Member States as great a margin of manoeuvre as possible. Accordingly, the chair of the Austrian Fiscal Advisory Council cautioned against looking only at figures, saying that individual Member States should also have more opportunity to carry out cyclical corrections and fund corresponding projects. All in all, the focus should be on improving the sustainability of budget policy in Europe over the long-term. Mr. Haber said he expected more of a political discussion when the debate on the Fiscal Compact begins, particularly, as he pointed out, the issue was not just economic policy, but also distribution among the European Union Member States. He also called for increased transparency with regard to the role of national parliaments. Governments should also expand their monitoring powers, he proposed.

Karas advocates the expansion of the European Semester

The concerted responses to the financial crisis have borne fruit, and the euro is stronger today than it was in 2008. For MEP Othmas Karas, deputy chair of the conference, this is proof that Europe can also tackle the most difficult of tasks when there is a shared political will. The deepening of the Economic and Monetary Union is not yet complete, and Europe has yet to fully learn its lessons from the crisis. It would be wrong-headed to move on with business as usual only because Greece has now exited the rescue programme, Mr. Karas said in an attempt to dampen excessive optimism. Healthy public budgets, a joint budget, joint economic and fiscal policies and joint fiscal policy rules are required for the proper functioning of the common currency, stated the Austrian MEP. Mr. Karas also underscored the importance of the European Semester, which he believes should be expanded further. Moreover, a sanctioning mechanism is indispensable for those Member States who do not comply with joint resolutions. In addition, Mr. Karas would like to see the inclusion of national parliaments in the European Semester; he also advocated transposing the measures enacted in the wake of the crisis into EU law.

Europe must act in concert

The necessity of concerted efforts in Europe to meet economic and fiscal policy challenges formed a common thread in the subsequent interventions from the parliamentarians. From Portugal, and also from the Netherlands and Greece, came the call for the completion of the Banking Union. A representative from Cypress advocated the creation of a European Monetary Fund modelled on the International Monetary Fund. A number of parliamentarians cautioned that the social dimension should not fall by the wayside in the discussions on fiscal policy stability. Finally, a parliamentarian from Germany called for securing the rights of national parliaments in light of the ESM reform. (continuation Interparliamentary Conference on SECG)

PLEASE NOTE: Photos of the conference can be found at the website of the Austrian Parliament at

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