If there is a measure that stayed rather unnoticed despite the danger it poses to Luxembourg, it is undoubtedly the approval of Treaty on Stability, Coordination and Governance in the Economic and Monetary Union , commonly refered to as Fiscal Compact.
What is it about?
Two years ago, EU member states – with the exception of the United Kingdom and the Czech Republic – signed in Brussels a new treaty to „promote fiscal discipline.“ Countries are therefore committed to submit national budgets that are balanced. In addition to the deficit that cannot exceed 3% of Gross domestic product (criterion already established under the Maastricht Treaty), the limit of the structural deficit has been decreased from 1 % to 0.5 % of GDP. Member States are more than ever bound to reduce their spending or raise taxes.
ADR has always supported the principle of a balanced budget amendment. It is crucial that the Government finally succees in reducing the budget deficit, especially since it is quite possible to achieve this without taking unreasonable action that would jeopardize the economic development of Luxembourg or its social cohesion.
What is unacceptable is that the balanced budget amendment was imposed by the European authorities, and not introduced by the Luxembourg government. The consequences could be disastrous! In case of non-compliance with the Treaty provisions (if the deficit is too high relative to GDP) a „correction mechanism“ is triggered automatically. Much jargon to express a simple, but inacceptable principle: the European Commission, and not the Parliament, will decide on national finances! Moreover, the European Court of Justice, of course composed of unelected judges, can impose financial penalties of up to 0.1 % of GDP.
How can one accept that decions related to the national budget are taken by institutions with which citizens do not identify, and not by elected representatives? ADR and other AECR members speak up for a more democratic European Union that respects the principle of national sovereignty!