Rigor yes, but not if it is to break the European economy. This is a real bomb that Mario Draghi, chairman of the ECB, just lit: “Today, what I have in mind is the need for growth pact, he released Wednesday at a hearing before Parliament. We have a budget pact (…), but we must go back and make a pact for growth. ”
The head of the ECB continues to advocate the “flexibility” of labor and good management. But the change of priority, professed by the herald of an institution known for its orthodoxy, is of course the honey Francois Hollande.
The Socialist candidate wants to reduce the collective discipline. Nicolas Sarkozy also spoke of growth. But there is no question for the president to overrule a treaty on budget he controlled himself with Angela Merkel.
Beyond the French countryside, the little phrase from Mario Draghi adds to the voice of Christine Lagarde, the IMF, and Timothy Geithner, U.S. Treasury. To varying degrees, all three now wish that Europe differs from budget cuts in favor of a stimulation of growth yet to be defined.
Germany, it remains clinging to return to equilibrium, under penalty. Berlin immediately launched against a fire, by extolling the virtues of rigor. “Fiscal consolidation and structural reforms courageous labor market pay. This is an important message to our partners in Europe, “said Minister of Economy, Philipp Rösler, announcing his country for a 0.7% growth this year and 1.6% in 2013, after 3% in 2011.
Still, the French president could change the balance of power. Especially as Italy, the Netherlands and Spain in particular find themselves confronted with politically impossible budgetary sacrifices. In short, four of the five largest economies of the euro would be willing to release the clamp.
Loosen the grip on public finances
According to exclusive information obtained by Le Figaro, the discussion is mature enough that notes already circulating between Brussels, Frankfurt and various European capitals. The first inflection is on the record the hottest: Spain and its banks, whose fragility give cold sweats in the markets, at the risk of the euro falter again.
This is to prepare and, when appropriate, to conduct an emergency rescue in Europe. The need to recapitalize Spanish is unofficially estimated at 50 billion euros. A scenario is appealing to the relief fund of the euro (EFSF and / or SS) in a simplified and unique: the loans would come with conditions minimized, making wince in Berlin and The Hague.
The second measure, more generally, is to loosen all the screws on public finances, so as not to strangle what remains of activity. Without displaying it officially, they are letting slip the goal of reducing the budget deficit, now absolutely set at 3% in 2013 to almost all EU countries, including France.
“The course could have been required if growth and world trade were to go, said a minister aware of the discussion. But for countries burdened by recession and unemployment, it became untenable. “Exit So, next year, what Eurocrats call the Maastricht target, mechanical step toward the golden rule and the return to wanted a balanced budget by Angela Merkel and Nicolas Sarkozy.
Mario Draghi has implicitly conceded by saying disappointed that the massive injection of liquidity by the ECB launched did not use more to the real economy. The Mint “can not compensate the lack of demand,” he admits. The diagnosis is made plain, and let Does it mean, it’s time to change the prescription.