Another crack in the Eurozone:
European Union finance ministers broke the law in November when they suspended budget rules to excuse France and Germany from deficit-reduction measures demanded by the European Commission, Europe’s highest court ruled.
The ruling by the Court of Justice in Luxembourg, its first on the “stability pact” governing budgets, rekindled discussion about how far deficits should be cut during an economic slump. It may also add impetus to proposals by EU Monetary Affairs Commissioner Joaquin Almunia to give governments more leeway in how and when they take steps to reduce deficits.
“The message should be: let’s start a sound and constructive debate on how the pact can be reformed,” said Peter Bofinger, a member of German Chancellor Gerhard Schroeder’s council of economic advisers, in a telephone interview. Jose Manuel Durao Barroso, who takes over as European Commission president in November, told the European Parliament in Brussels he is ready to “make the pact more credible without rewriting” it.
So. The Court of Justice ruled that Germany and France broke the rules last year. Germany’s response amounts to, “Then let’s change the rules.”
That’s no way to run a common currency.