Without automatic sanctions no European budget discipline

At the beginning of the last few weeks, Angela Merkel ally of Nicolas Sarkozy and “par ordre de mufti” announce in the current round of negotiations of the EU finance ministers that France and Germany wanted no automatic sanctions in the form of fines more to Member States. It comes to budgetary discipline for lack of preventive discipline. In the spring, when Greece was insolvent, the federal government insisted on a strict, punitive armoured regiment of the European Commission to protect the stability of the common currency.

Finally, the taxpayer shall also be liable to the fabulous sum of 148 billion euros, almost half a yearly budget of the Federation, for the euro rescue action. The contradiction is now formulated, and it is more than justified. The stability of the euro and ultimately the welfare of Germany as the strongest European economy depends on the dispute. If Germany is not careful, then it gets into a permanent paymaster role of a European transfer union in which we must be responsible for the unsound fiscal policies of other European budget sinners.

After the de facto bankruptcy of Greece and the financial troubles in Ireland, Portugal and Spain had, every politician be clear that the future must be set much more on fiscal prevention in Europe. A set of rules without automatic sanctions mechanism falls victim to political expediency. In addition, what good is a euro stability pact with lofty goals that are on paper, but do not lead to significant penalties? Without a common economic policy, there will be little more. If the other EU countries follow the German example and reduce their wages to improve their export capabilities, we also have a problem in Germany. Growth this year will depend in fact only on the export.

However, it does not produce any surplus. So how are the other countries resolve their deficits if Germany wants further towards export optimization? As can be sanctioned as much as you want. Either the German economy suffers because the other countries follow the German model and import less, or the deficits continue to rise.

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