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Press release

Commissioner Rehn pledges slower austerity to critical MEPs

Economic and monetary affairs - 25-04-2013 - 15:52
Committee : Economic and Monetary Affairs
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The European Commission's austerity focus was widely lambasted by centre-left MEPs at an Economic and Monetary Affairs Committee meeting with Commissioner Olli Rehn on Thursday, only a week after he last came in for strong criticism in Parliament's plenary chamber. But the centre right's lead MEP urged Mr Rehn to show more bravery and conviction amid growing signs that the Commission may to bow to anti-austerity campaigners.

Mr Rehn began by saying that the reforms already undertaken meant that the pace of fiscal consolidation could now be slowed. This drew centre-right criticism that the Commission was straying from the right course and sending the wrong signal that it was ready to bend to pressures and row back on its economic reform agenda. 

By contrast, centre-left MEPs argued that Mr Rehn's comments did not go far enough. Some said that austerity was simply not working and no longer had any political or social support, others that EU countries need new incentives, not just slower reform.

In a veiled acknowledgement that more relief would be good for Eurocrisis countries, Mr Rehn hinted that softening austerity would be justified by "rational economic theory" but that political constraints imposed by the wealthier countries made it hard to do..

Asked whether his proposal for a slower reform agenda would apply to all countries,  Mr Rehn said it would not, addeing that some countries were prepared to continue reforming fast.

Criticisms were also levelled at the Commission's track record in improving employment, its failure to put enough pressure on debt-strapped countries to cut military expenditure, and its almost exclusive focus on public debt, to the detriment of private debt and implicit debt. 

Finally, various MEPs complained that the workings of the Troika (ECB, IMF, Commission) in countries receiving bailout loans were obscure and unaccountable.  This issue will be debated at the committee's 7 and 8 May hearings with the ECB's Jorg Asmussen, Eurogroup President Jeroen Dijsselbloem, and Commissioner Rehn on the Troika's handling of the Cyprus bailout.  The IMF will also be heard on the same matter towards the end of May.

REF.: 20130422IPR07543