At a meeting in Milan on 12 September, the finance ministers of the euro-area reaffirmed their commitment to continue with structural reforms in order to make the eurozone economy stronger and more competitive. The main aim is to decrease tax burden on labor and several basic principles of the reforms were agreed. Firstly, taxes on most vulnerable citizens are to be reduced. Compensatory measures for such reduction are to be carried out in sectors not so detrimental to economic growth. Tax reductions are to be accompanied by labor market reforms. Lastly, broad political and societal consensus on these reforms is to be achieved. Eurozone members are expected to implement these principles in their future budget plans.
Earlier this month, the European Central Bank took unprecedented action against dangerously low levels of inflation, including limited bond buying program. Finance ministers of the eurozone expressed their approval of Mario Draghi´s words that any ECB action must be complemented by reform by the governments. Reform, sound fiscal policies and investment facilitation are the eurozone´s growth strategy. However, the Stability and Growth Pact must at any time be respected. Any flexibility many are calling for must be found only within SGP rules, the ministers agreed.
Eurogroup president Jeroen Dijsselbloem will guide the ministerial group until the end of his mandate, the ministers agreed. Spain was hoping to fetch the seat for its incumbent finance minister. Also, the French finance minister announced that France will not present a budget in line with the SGP until 2017, that is 2 years after the deadline set by the Eurogroup which was already extended once. This raised the discontent among eurozone´s finance ministers with French fiscal policy and the French minister had to face tough criticisms. A eurozone member whose budget does not respect the SGP can by fined by the Council.
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