Sunday, 23 May 2010

Tracking eurozone crisis measures: Beware the ides of March

In Tracking Eurozone crisis measures: Half empty or half full? (23 May 2010) we recapitulated the official ECB and EU decisions published and sketched the road map to track the communications from the institutions and informal groups on the eurozone crisis and economic governance in a few blog posts.

Even if most of the flurry of activities has been seen in May, we have cause to see how our leaders have acted to avert the dangers.

Beware the ides of March offers a reasonable starting point for brief retrospection, although the storm had been brewing for a time.

ECOFIN 16 March 2010

3003rd Council meeting Economic and Financial Affairs, Brussels, 16 March 2010 (document 7498/10)

On the excessive deficit procedure – follow-up to the decision on Greece, ECOFIN reached the following conclusions:

The Council examined a communication from the Commission assessing action taken by Greece in response to the decision it took on 16 February on the correction of Greece's excessive deficit.

The Council welcomed the first report by Greece, submitted on 8 March, and the Commission's communication. It shared the Commission's view that Greece is appropriately implementing the Council's decision and Greece's stability programme. It welcomed the additional measures announced by the Greek government on 3 March, amounting to 2% of gross domestic product (GDP) and consisting of permanent revenue-increasing measures and permanent expenditure cuts in equal shares. In line with the Commission's assessment, the Council considered that these additional measures appear sufficient to safeguard budgetary targets for 2010, provided that they are implemented effectively, fully and in a timely manner.

In its 16 February decision, adopted under article 126(9) of the Treaty on the Functioning of the European Union, the Council:

– gave notice to Greece to bring its government deficit below 3% of GDP, the reference value set by the EU treaty, by 2012;

– set out a timetable of measures to be taken, including a target of 8.7% of GDP for its 2010 budgetary deficit, which represents a 4 percentage points reduction from the estimated 12.7% deficit for 2009;

– set 16 March as the first of a series of deadlines for reporting on measures taken;

– stated that, to the extent that a number of risks associated with the specified deficit and debt ceilings materialise, Greece would announce, in its first report, additional measures to ensure that the 2010 budgetary target is met.

Greece has been subject to an excessive deficit procedure since April 2009.

Caesar: The ides of March are come.

Soothsayer: Ay, Caesar; but not gone.

(Shakespeare: Julius Caesar Act III, Scene I)

Greece was under close ECOFIN scrutiny and the Greek government had announced corrective measures, but the full force gale had not yet lifted them up to say nothing about taking them home.

Ralf Grahn