THE COMMUNICATIONS MINISTER Pat Rabbitte has played down yesterday’s announcement by French presidential front-runner Francois Hollande concerning the Fiscal Compact Treaty.
Hollande vowed yesterday that, if elected, he would immediately ask other European leaders to renegotiate the fiscal treaty, which focuses on tightening budgets as a way to restore market confidence in the eurozone, to include a “growth pact”.
The presidential candidate said he wanted the growth pact to include a financial transaction tax and eurobonds — government bonds jointly issued by all 17 countries that use the euro — to finance infrastructure projects. He said the main risk currently to the European economy is that “we remain in recession because we haven’t freed up enough financing for companies”.
Today, Minister Rabbitte fully agreed that a growth agenda was needed in Europe, but said that “a whole series of growth-enhancing initiatives were agreed by EU leaders on the very same day they agreed the Treaty”.
He said that while Hollande had pushed for additional measures to promote economic growth in Europe, he had also made it plain that he was not be seeking to “unpick the Treaty text as signed or to dismantle the fiscal disciplines”. Rabbitte said the Irish Government believed that stance improved the prospect of returning stability to the eurozone, and that the additional measures did not need to be added to the text being voted on in May.
Ireland’s economic downturn was a result of a period of unsustainable growth, a construction boom, and the abandonment of a ‘good housekeeping’ system of national budget rules, Rabbitte said. As such, he said, fiscal discipline was a necessary pre-condition for stability – and that stability was a necessary pre-condition for a return to economic growth.
Rabbitte added: “When you’re in a hole, the first step is to stop digging. The next step is to haul yourself out of the hole – preferably with some help from your friends.”
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