Europe’s finance ministers yesterday warned the European economic situation was “deteriorating fast”, a day after Commission forecasts revealed the bloc was headed for a deeper downturn.
Meeting in Brussels yesterday, the ministers said the EU had adopted a number of decisive measures to restore confidence and a return to growth.
These included financial rescue packages to stabilise the banking sector and restore lending and credit channels, and also the European Economic Recovery Plan to support demand and employment through stimulus measures.
The measures will be accompanied by structural reforms within the Lisbon Strategy, the ministers said, but they ruled radical changes to state aid rules.
“No radical overhauls of reform strategies are warranted and backtracking should be avoided… when implementing national measures, distortions of the single market should be avoided by adherence to competition and state aid rules.”
The ministers said the measures will take time before having an impact on the real economy.
“Meanwhile a period of negative economic data is expected,” the ministers said, saying member states should remain committed to keeping sound public finances.
“While budget deficits will increase in the short run, and a number of Member States will temporarily exceed the deficit reference value, we remain fully committed to sound and sustainable public finances.”
Eurozone members are committed to a deficit of 3% of their GDP according to the Stability and Growth Pact.
“The adjustment path and recommendations will take into account this exceptional situation, as well as differences in fiscal space. These procedures should be seen as an instrument for constructive peer pressure, helping to return to sustainable public finances.
“We are all committed to return to our consolidation path towards medium-term budgetary targets as soon as possible, keeping pace with the economic recovery. The coordinated fiscal stimulus will thus be followed by a coordinated budget consolidation.”