Monday, September 27, 2010

EU to punish succesful economies

Now I know that Timmy has a view that imports are the basis of economic success while exports bleed tyou dry - or something like that - but still I find the idea that a country that exports too much is set to be penalised by the EU under new rules rather weird, reported in the Speigel that seems to be the case.
According to draft regulations drawn up by Rehn's agency, countries with chronic current account surpluses or deficits (in other words, countries that export far more than they import, or vice versa) are to pay an annual fine amounting to 0.1 percent of their gross domestic product (GDP), because they threaten the stability of the euro zone.

Eh? Run that past me again.

Better still is that these rules apply of course to all the EU, not just those in the Euro zone. And yes, I know that it is unlikely that the UK would get into the situation that it would have a 'Chronic current account surplus' but you never know.
According to Rehn's plans, all EU countries will have to introduce binding medium-term financial planning along with financial policy rules that are modeled after Germany's so-called debt brake (an amendment to Germany's constitution that requires the government to virtually eliminate the structural deficit by 2016). Rehn says that the objectives of the Stability and Growth Pact now have to be "adopted as national legislation."

What's that? The British Government is going to veto these plans. Really, show me how.

1 comment:

Monty Cristo said...

Can I now make the assumption that we live in a 'Mediocracy'?