Eurozone Watch

Last week, the Grand Coalition made sure that their legacy in Germany's economic policy stance will be far beyond the next election on September 27, 2008. After the Bundestag had already voted to amend the constitution and to include a sweeping ban on public borrowing a couple weeks ago, the Bundesrat (the part of parliament which represents the Länder) now also voted for including a more strict ban on public borrowing into the constitution.

Prior to this change, the German constitution had a simple rule: Outside times of "economic disequilibrium", the government was not allowed to borrow more than it was spending on investment.

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Regarding the SPE’s performance in the European elections, a recurrent question was why the Socialists/Social Democrats did not reach better scores: Why hasn’t the left been able to capitalise on the shift in public attitudes against conservative economic liberalism and right wing individualism in the current crisis? The SPE’s election manifesto does start with the observation that "this crisis marks the end of a conservative era of badly regulated markets". The voters in last week-end’s European election however do not seem to have noticed.

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We know how limited the influence of the European Parliament (EP) is in the shaping of the EU’s economic policy and in managing the current financial and economic crisis. And we also know that what parties say before parliamentary elections is not necessarily the policy they implement afterwards, especially not if it is the EP that it is elected.
But still: we decided to take a look at the positions of the major parties on economic and financial issues and in particular whether there is an EMU dimension to what they have to say. Afterall, the Parliamentary Committee on Monetary and Financial Affairs since the start of EMU has become more and more active, in particular in its dialogue both with the ECB and the Eurogroup President, and it has in the past issued reports on the reform of EMU governance. Hence we publish a review of the major parties' positions on economic governance.

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The German Foreign Secretary and social democratic candidate for the Chancellors office in the next general elections in September 2009 has finally formulated some ideas on the future of Eurozone governance. Unexpected by many who had given up hope that the SPD candidate would pronounce himself on this matter before the European and German elections, he devoted 10 lines of yesterday’s speech in Budapest to EMU – and has departed in at least six aspects from the position on EMU the grand coalition has been holding before and during the current crisis.

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