Jean-Claude Trichet opposes deficit relaxation
Jean-Claude Trichet, president of the European Central Bank, has warned that governments must adapt to stay within existing rules on budget defecits.
Currently, any budget deficit should remain under 3% if Gross Domestic Product, but both France and Germany have failed to stay on target for this.
Germany has been outside of 3% for the past 3 years, and still wants to keep costs of unifying the country out of current calculations. France is specifically looking to discount research and development costs to help balance its own figures.
At a committee of the European Parliament Jean-Claude Trichet stated:
“The credibility of the excessive deficit procedure as a means to deter and correct excessive deficits needs to be fully preserved…this is necessary to anchor expectations of fiscal soundness which is fundamental, not only for macro-economic stability and cohesion in the euro area, but also for enhancing confidence and fostering growth prospects.”
Currently the European Central Bank is predicting moderate growth for 2005/2006, with around 2% inflation across the eurozone.
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