Belgium should restore competitive power
Euro commissioner for Economic Affairs Olli Rehn presented his first report on macro-economic imbalances in Europe yesterday as part of the sixpack measures to improve policy control on member states. This sixpack contains stringent regulations to eliminate budget deficits 3% of the GDP and state debt 60% of GDP, but is less strict in its control of the economic policy of the member states. European countries will be checked against ten criteria to see if their economic policies are in order. As soon as some danger lights start to flicker, the country in question will be subjected to a thorough investigation. This year, twelve countries have come under the spotlight. For Belgium, the United Kingdom and a number of other countries the main problem is a loss of competitive power. And then many countries, including Belgium again, struggle with an excessive debt burden. As such, Belgian household and business debt is not that high, but combined with the high public debt it is a problem. The Commission will conduct its thorough investigations on Belgium and the other countries concerned by May. This will be followed by a number of recommendations, which Belgium must put into policy later in the year. The scrapping of the automatic wage indexation may not be expected, but control over wage costs will have to be streamlined. Germany received no criticism. Like the Netherlands, the country has long been criticised for its excessive exports and low consumption. Not all countries can record a trade surplus. Germany’s surpluses are Greece’s deficits, the argument goes. But Berlin has rejected the criticism and Commission Chairman José Manuel Barroso would not dare disagree. Rehn also backs the Germans and cannot find any fault with the high German wages or the country’s trade surplus.