Borg drops resistance to EU fiscal stimulus

Borg has long preached fiscal restraint and caution in discussions about how best to spark EU economic growth, resisting calls for wealthier member states to help fund the recovery in countries mired in economic crisis.

But upon his arrival in Brussels on Tuesday to attend a meeting of EU finance ministers, Borg said that the time has come to consider fiscal stimuli to help boost the economies of Europe.

“The European economy needs a bit more energy. This recovery has been very uneven. It’s not enough to rely on monetary policy; there also has to be a push from the fiscal side,” Borg told the TT news agency.

While Borg still favours “structural reforms” for countries with the most troubled economies, fiscal spending should be considered in countries where things are showing signs of improvement, such as Estonia and Germany.

However, Borg refused to be specific about what sort of spending measures he might propose.

“That’s something every country must decide, but cutting taxes and investing in education should be seen as appropriate measures because those are the sort of things that can bring better long-term growth,” he said.

Also up for discussion among the EU finance ministers is an agreement on an amended budget for 2013, something the European Commission has requested to help cover an expected €11 billion shortfall and which is a precursor to further negotiations on the EU’s long-term budget for 2014-2020.

The ministers are set to propose a compromise €7 billion amended budget, a level that Borg nevertheless thinks is too high.

“Our assessment is that it’s much too big an increase. That’s one thing to be sitting in these discussions about budget changes in November or December when it’s apparent you need to contribute funds – even if that’s also problematic – but that we are already starting to contribute funds is something we think is inappropriate,” Borg said.

TT/The Local/dl

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